If you have a mortgage, you know that you want to pay it off as quickly as possible. In the current environment, interest rates are at an all time low. With the rates being this low it is a great time to look at ways to reduce your mortgage. We spoke to Marty Oke from Ultimate Finance Group to give us a couple of quick tips to reduce the time it takes to pay off your home loan.
Mortgage Offset Accounts:
Having an offset account and keeping your salary sitting in their is an effective way to reduce your overall interest you will spend on your home loan. The trick is to look for a good rewards credit card and spend all your monthly living expenses on your credit card. At the end of each month pay it off in full so you don’t get charged interest on the credit card.
This will ensure maximum earning on your rewards points from your credit card and also offsetting your mortgage interest to ensure your payments are paying off more principal. This however, can be challenging if you don’t have strong discipline with not exceeding your income and overspending on your credit card.
Change the frequency of your repayments:
If you think temptation might get the better of you, another great way to save money is to just pay your loan repayments weekly, paying weekly can reduce significant time off the life of your loan, as the interest is calculated against the amount you owe on a daily basis, however it is charged monthly. Therefore by paying weekly your interest is calculated on a lower negative balance each month. The easiest way to work out your minimum weekly payment is to just divide your monthly repayment by 4. As there is more than 4 weeks in the average month, this will also help you sneak in an extra payment or two on those longer months.
Keep in mind, if you are on a fixed rate loan, you may have restrictions on what you can and can’t pay in terms of extra repayments and your frequency.
We recommend speaking to one of the team at Ultimate Finance Group to determine what may work for you.
Article Written by Marty Oke
Marty is the managing director of Ultimate Finance Group