- Make fortnightly or weekly payments. When financiers calculate your mortgage repayments monthly. If you select fortnightly or weekly, they will divide the monthly repayment by two or four.
- Monthly Payments – Let’s use $1,000/month as the assumed repayment.
You pay $1,000 x 12 = $12,000pa. - Fortnightly payments – $500 per fortnight
You pay $500 x26 (fortnights) = $13,000pa. - Weekly payments – $250 per fortnight
You pay $250 x52 (weeks) = $13,000pa.By making that one extra payment each year, you can save thousands of dollars and years off your mortgage.
- Monthly Payments – Let’s use $1,000/month as the assumed repayment.
- Consider a refinance. Check out whether the interest rate you are paying is higher than current market rates. If you have had good repayment history and paid off some debt this may be a valid option. There are costs associated with refinancing your mortgage, get an estimate of those fees before you decide to invest time to explore.Refinancing may help with lowering your monthly or fortnightly expenses, however, consider how long you have been with your currently lender, extending the life of your new loan back over 25 or 30 years, may cost you a lot longer in the long term. Remember you don’t always have to take out a 25 or 30 year loan term, it could be less.
- Use a offset account to reduce loan interest. A standard variable rate loan generally offers you the option of putting your income and savings into an offset account to reduce your loan interest. So, by paying your income directly into this account you offset the interest payable on your home loan. This can save you thousands over the life of the loan.
- A fixed amount greater than the minimum repayment. Anytime during the loan process you can start a great discipline being adding a fixed amount greater than the minimum payment. If you can afford say an extra $50 a week, you can set your direct debit to always take an additional fixed amount regardless of the interest rate.
- Synchronise loan repayments with your pay cycle. Synchronising your loan repayments with your payday eases the budget process. Then you can always make the mortgage repayment your priorities, other expenses after this.