How can I pay off my home loan quicker?
There are simple & effective ways to reduce your mortgage. As Albert Einstein once said, "compound interest is the 8th wonder of the world. Those who understand it, earn it. Those who don't, pay it."
Contact us to learn how
Let's take a look
1. Small consistent extra repayments
✅Problem is most people think small consistent repayments like $25 per week won't do much.
✅You got to think through the lens of compound interest over time. The comparison on the graph above is from a $500K loan with $25 per week extra repayment for the life of the loan.
2. Deposit lump sums
✅Make the effort to deposit lump sums like tax returns & bonuses into your loan. Through the power of compound interest this will magnify over time.
✅As an example, let's repay an extra $25 per week over the life of a $500K loan. Would you believe this tiny sacrifice creates an interest saving of $32K & over 2.5 years saved in repayments.
✅That's 2.5 years you don't have to go to work to pay interest to your lender!
3. Pay fortnightly
✅A simple change, but well worth it. There are 12 months in a year but 13 four-week cycles. Why is this important? When you switch to fortnightly intervals you are essentially paying off an extra month per year!
✅Compound interest over the life of the loan is powerful.
4. Correct loan type
✅Choose a loan that allows extra repayments without penalty or excess fees to set it up. ✅Make sure you have access to these "extra repayments" if you need them in the future, such as redraw or offset.
✅Interest is calculated daily but charged monthly. So any money sitting in the account each day will help reduce the loan. This is why sometimes using the interest free period on credit cards is powerful. But, this can also lead to problems if you're not super strict, so maybe steer clear of this option.
Don't bank charge fees for offset accounts?
✅Sometimes, yes. But depending on your occupation and package this can be minimised.
✅Talk to us at Mortgage Broker Revesby before doing anything.
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