Why paying off your mortgage faster matters

By May 3, 2018Uncategorized

If you’re in the market for a home loan, or if you’re planning to refinance your mortgage for a better deal, now is your ideal time to start things off in the smartest way possible – with strategic research to help you make the right decisions and pay your mortgage off faster for some long-term savings benefits.

Start by shopping around for a competitive home loan – or better yet, connect with an experienced mortgage broker who can do the research for you and present you with all the options available to suit your circumstances.

In the quest to pay your mortgage off faster and save money on interest, there are many things to consider, so always do your homework to weigh up all the pros and cons.

Introductory Interest Rates

A loan that offers an enticing honeymoon or introductory interest rate might seem like a good bargain but dig deeper to see if it is actually costing you more in the long-run before you commit. Typically, the savings are short-lived and your loan may be more expensive over time.

Switching Home Loans

Refinancing your mortgage is something everyone should look into throughout the life of their loan – there is usually always a better deal to be found. But, before you commit to making the switch, get the right advice from a trusted mortgage specialist. Savings on interest can be cancelled out by additional fees and transfers and sometimes, just the thought that you might take your business elsewhere is enough for your existing lender to give you a more competitive interest rate to retain your mortgage.

Asking your current lender to match the best deal on offer to you can add up to a genuine saving – and without all the hassle of switching lenders. Never be pressured into switching your mortgage to another lender if it really isn’t the best deal for you. By comparing all related fees and charges you can do an accurate assessment about whether switching is delivering a real savings and can help you pay off your mortgage faster.

Make larger and more regular payments on your home loan

Unless you have an interest-only loan, your repayments on your mortgage pay both principal and interest. That means, on a standard 25-year mortgage, any extra payments that you make in the first 5-8 years of your home loan (when the majority of payments go to servicing the interest), will have a positive impact on cutting your interest bill and reducing the life of your mortgage.

Top tip? When interest rates drop, maintain your repayments at the same rate. You’ll be paying more off, faster, without noticing any extra financial stress. Talk to your finance broker to check that your loan does let you make additional payments. For some mortgages with fixed rates, you are limited in how much extra you can repay over the lifetime of the home loan. Also check to be sure there are no fees or penalties for faster repayment. Making extra repayments can save you years – and thousands of dollars – but only if your mortgage agreement allows it.

The Benefits of Paying Any Loan Off Faster

Doing your research will reveal the best possible reasons to pay down your loan faster – it’s all about saving money in the long-term. And once you start to imagine what those extra savings could mean to your secure financial future – including everything from saving for another investment property, to adding to your super for a better retirement, it makes sense to pay your mortgage and any other loans you have as quickly as you can.

Building equity is another obvious benefit to paying your loan as quickly as you can afford to. If you’ve worked hard to build an asset for yourself with a property purchase, you’ll appreciate the way investment in property can help you protect your future financial security. And the next step? Creating enough equity in your current property so you can afford to do it all over again with the funds to help you access another property to add to your portfolio. It might seem like a far-off dream for now but if investing in property is something you’d love to do in the future, paying off your home loan quickly helps you in a couple of ways. Not only do you show the lender your ability to manage your finances well – you also lay the foundation for access to finds that can help you refinance and re-invest in a subsequent property. Investing in properties as a wealth-building strategy may not suit everyone but it’s worth discussing with a trusted financial planner and mortgage broking specialist to see if it is a strategy that could be a lucrative part of your future.

To find out more about how paying your home loan faster can help you, get the right advice from our team of mortgage experts at Lending Specialists today.

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