Reduce your home loan with Reventon
Have you been paying off your home loan for years but the end still isn’t in sight? You’re not alone. Whether it’s an investment home loan or a mortgage for the house you live in, plenty of people are counting down the days until they’re free of their mortgage. If you want to speed up the process, there are small, strategic changes you can make that will have a big impact on when you can finally say you’re loan-free.
1. Check your budget and spending
It’s always important to keep track of your monthly budgets, but when was the last time you sat down in front of a spreadsheet? You might shock yourself with how much is going to your local cafes and restaurants – that $4 coffee each day can really add up. Ask yourself whether there are any costs you’re willing to cut down on and see how much you’re saving each month. It could be money better spent paying off your home loan.
2. Pay the loan off fortnightly
If you currently pay monthly, consider arranging for your home loan to be paid every fortnight – it can drastically cut down the total term of your home loan (and therefore lower your interest payments with it!) With 12 months every year, let’s say your monthly payments come to $2000 a month, you’ll be paying $24,000. If you change to $1,000 a fortnight, with 26 fortnights in a year, you’ll be paying $26,000. Changing to fortnightly payments can subtly increase the amount you pay on your mortgage and can better match up with fortnightly pay cheques.
3. Consider refinancing your home loan
It is often that case that people get a home loan and leave it for three, five, or even 10 years without thinking much about it. Over this time, rates have gotten more competitive, but you haven’t been shopping around. Perhaps you could find a far better deal on your home loan by refinancing and switching lenders. This way, if you keep your repayments the same each month, you’ll actually be paying off more principal and therefore clear your debt much quicker. Even a reduction of 1% can mean a world of difference.
4. Maintain your mortgage repayment rate
If you’re on a tracker mortgage, it can be tempting to take advantage of lower interest periods and reduce your rate, giving you a bit of extra cash to spend each month. But, if your budget was working for you before, try to stay strong and keep your home loan payments the same – this means you’ll be paying off more of your principal and you’ll be clearing your home loan much more quickly.
5. Consider an offset account
An offset account links your savings to your home loan. Why? So that when your interest on your home loan is calculated, your balance is deducted leaving you with less interest to pay overall. Let’s imagine you have a $500,000 home loan with $60,000 in savings. With an offset account, you’d only be paying interest on $440,000 of your home loan, which can save you thousands in interest payments each year. With a reduction in interest, you can redirect the money saved into paying off your principal and therefore getting loan-free sooner.
Get home loan advice
Whether you’re looking for your first loan, you’re refinancing, or you just want to know your options, it pays to get advice from professionals. With support, you can be confident that you are making the right decision for your financial future – and you could potentially be saving yourself thousands in the long run.
Reventon’s leadership team have over 125 years of collective experience, and we’ve got in-depth knowledge of the current home loan market. So if you’re looking to pay of your home loan more quickly, get in touch with one of our friendly team members.