One of the most common new year’s resolutions is to try and save money. One of the easiest ways to save money is to take a look at your home loan and find some creative ways to cut down on your repayments. Fortunately, there are a number of different things you can do with your home loan to reduce your ongoing monthly repayments.
If you stick with the same lender for a long period of time, it’s very likely that you’re not getting the best rate you could be. By refinancing, you’re able to seek out a lower interest rate and that alone has the potential to save you money every month. Typically, you should be reviewing your home loan products regularly with the help of your mortgage broker and always looking for the best deal to suit your needs.
If your home loan product doesn’t come with an offset account, it’s very likely that you’re missing out on some good opportunities to save money. An offset account is a lot like a transaction account. However, it has the added benefit of saving you interest on any funds that are sitting in the account as it works in conjunction with your home loan account. Given the financial environment that have seen savings accounts attracting incredibly low rates of interest, it’s well worth considering parking any spare funds in an offset account.
A simple change like making fortnightly repayments over monthly has a huge impact on how much money you’re putting into your home loan over a long period of time. Instead of making 12 payments, you end up making 26 smaller payments, with the net amount paid being higher. This means that you’re paying down your mortgage faster and reducing your interest charges in the process.
If you have the opportunity to pay down your mortgage with a large lump sum payment, this has the additional impact of saving you money on interest. These types of funds might come your way thanks to a bonus at work, a gift, an inheritance or even from the sale of an asset such as a car. The faster you can reduce your mortgage balance, the lower your interest payments will be.
If you have a home loan and you also have high-interest debt such as car loans, credit card debt or personal loans, it might be worth looking at rolling all those debts into your home loan. By doing that, you’ll reduce your ongoing weekly interest costs which is money that you can then use to pay down those debts faster.
If you would like to chat to us your specific circumstances, or about finance and/or property in general, or simply refinancing your existing home loan for a better rate, please feel free to give us a call on 02 8004 2222 or book an appointment.
Although we are located in Crows Nest, we service clients from St Leonards, Artarmon, Wollstonecraft, Cammeray, Northbridge, Naremburn, Neutral Bay, Greenwich, North Sydney, Waverton to Willoughby and all areas of Greater Sydney.
PS This article is prepared based on general information. It does not take into account individual financial or property objectives or needs and is not financial product or investment advice.