How to pay your home loan quicker?
20 Apr 2023
Paying off a home loan quickly can help you save money on interest and become mortgage-free sooner. Here are a few strategies that can help you pay off your home loan quicker:
- Make extra payments: Making extra payments towards your home loan can help you pay off the loan sooner. This could be done by increasing your regular payments, making lump sum payments, or by making fortnightly payments instead of monthly payments.
- Increase the frequency of repayments: Changing from monthly to fortnightly or weekly repayments can help you pay off your loan faster, as it increases the number of payments you make over the course of a year.
- Refinance: Refinancing your home loan to a lower interest rate can help you save money on interest and pay off the loan quicker.
- Pay off higher-interest debt: Prioritising the repayment of higher-interest debt, such as credit card debt, can free up more money to put towards your home loan
- Consider shortening the loan term: A shorter loan term means higher monthly payments, but it also means you will pay off the loan quicker and pay less interest. Keep in mind that higher monthly repayments are likely to impact your future borrowing capacity for other loans, in case it is critical part of your overall financial strategy.
- Make use of offset accounts: An offset account is a savings account linked to your home loan. The balance in the account is offset against the loan balance, which can reduce the amount of interest you pay.
- Avoid unnecessary expenses: Minimising unnecessary expenses and redirecting that money towards your mortgage can help you pay off your home loan quicker.
- Rent out a spare room: Renting out a spare room in your home can generate extra income that can be used to make extra payments towards your home loan.
It’s important to note that some of these strategies may not be feasible for everyone, and it’s important to consider the specific needs of your financial situation.