So you've bought your home and settled in. Now what? The commitment to regular repayments is a permanent fixture of your budget, your disposable income is much lower, but you have the security and peace of mind in owning your own home.
Insurance for your home and contents should have formed part of your pre-purchase calculations, and should now be automatically deducted from your income each month. This is really not an option, it is a necessity. Do not be one of those people crying on the news after a natural disaster or an accidental fire. Get insurance! Search online, check the phone book or talk to your agent, solicitor, bank or other professional advisor for referrals to brokers or insurance companies. Compare prices and make sure you are getting a good deal.
One way to do this is as follows: most mortgages will require you to make minimum monthly repayments. Therefore, you will make 12 payments per year. If you can afford to pay back more each week, then try the following... Divide your monthly payment by two, and make this payment every 2 weeks. In this way you will make 26 fortnightly payments each year. In doing so, you will increase the number of original 'monthly' payments each year by one, from 12 to 13. This is because you are effectively making one 'monthly' payment every 28 days, as opposed to the 30 or 31 days in most months. It is a simply strategy, but it can help you slash years and thousands of dollars off of your mortgage.
Many mortgages will allow you to redraw the extra payments if you need the cash in a hurry. Mortgage options that effectively double as a savings account are great ways to reduce your interest bill, avoid bank fees, and have your basic transaction account funds offsetting your mortgage expense. The lower the daily balance, the less interest you accrue, making sure your mortgage is paid off faster. Be mindful that most fixed rate loans do not offer this feature.
When you bought your home, the lender you chose for your home loan offered the best rate, the best flexibility and the best service, for your situation. Over time as official interest rates change, new lenders emerge and the products on offer evolve, that may cease to be. Check out our mortgage refinance guide for more information.