Paying off your mortgage faster offers not just financial relief but also the freedom to pursue life’s other goals. At Navanti Finance, we’re committed to helping you explore strategies that could bring you closer to being mortgage-free sooner.
Utilising an Offset Account
An offset account can be an effective tool in reducing the amount of interest you pay over the life of your loan. This savings or transaction account is linked directly to your home loan, and the balance in your offset account is subtracted from your mortgage balance when interest is calculated. By keeping more funds in your offset account—such as having your salary deposited there—you can decrease the interest charged on your mortgage, allowing you to pay it off more quickly. Remember to manage your day-to-day expenses smartly, potentially using a credit card with an interest-free period, while ensuring the credit card is paid off in full each month.
Switching to Fortnightly or Weekly Repayments
Another strategy to consider is switching from monthly to fortnightly/weekly repayments. By doing so, you effectively make extra repayments to the loan regularly, and thus reduce the total interest charged for your loan. For example, if your monthly mortgage repayment is $2,000, paying $1,000 every fortnight results in 26 payments annually, compared to 12 monthly payments. This additional payment reduces your principal faster, which in turn lowers the interest charged, helping you pay off your mortgage sooner.
Making Extra Repayments
Making additional repayments, whenever possible, is one of the most effective ways to shorten your loan term. Any extra funds you receive—whether from a tax return, bonus, investment profit or even a small windfall—can be directed towards your mortgage. The earlier you make these extra repayments, the more you’ll save in interest over the life of your loan. If you’re currently on a fixed-rate loan, be aware that some lenders may charge fees for extra repayments, so it’s worth checking with your lender first.
Refinancing to Lower Rates
Refinancing your mortgage can offer significant financial benefits, ensuring that you get the most competitive interest rates and utilising lender’s promotion and offers such as cashback, in order to pay off your home loan sooner. Additionally, it provides an opportunity to reassess your financial situation regularly and tailor your mortgage to stay true to achieve your long-term financial goals. At Navanti Finance, we offer our existing clients a regular home-loan checkup and regularly inform them on the latest offers and interest rate trends from our panel of lenders to help them secure the best offer available either from their existing lender or by refinancing to other lenders.
Maintaining the Same Repayments When Rates Fall
When interest rates fall, it can be tempting to reduce your mortgage repayments accordingly. However, keeping your repayments at the same level, even when rates drop, allows you to pay down your principal faster, effectively shortening your loan term. Ie. If you are refinancing to a cheaper rate loan, the new minimum monthly repayments offered should be less than the previous one. However, if you are actually able to comfortably afford the previous repayments amount, you can set up the new direct debit to be the same amount (technically you’re making extra repayments regularly) so that your loan is set to be paid off sooner.
At Navanti Finance, we are here to help you explore these strategies and more, ensuring you have the guidance needed to pay off your mortgage sooner. Contact us today to discuss how we can tailor a plan to suit your financial goals and help you achieve mortgage freedom.
