When it comes to repaying your mortgage, if you have the capacity to pay it off early, it can be one of the wisest investments you will make! Much like paying off any other debt, in order to pay off your mortgage early you will need to consider reducing your outgoings and putting the money you’ve saved straight into your mortgage.
We’ve put together three steps to help you pay off your mortgage faster and take control of that mortgage burden.
Review your budget
January is the perfect time to sit down and go through your personal budget. By reviewing your outgoings, you can quickly take control of how much you’re spending and identify areas where you can save money.
It’s always worth reviewing your utility providers and seeing what offers are out there. By switching provider, you can take advantage of good savings each month, which can all be applied to your mortgage.
It’s also wise to identify the little luxuries that you could possibly live without, we’re not saying go without your daily coffee, but how about switching from your non-fat, double shot mint Mocha with whipped cream and sprinkles to something like a black Americano? Sounds boring but you’ll save heaps in the long run!
Shorten the repayment terms
Did you know you’re able to reduce the repayment term with your lender? As standard, most lenders quote their rates based on a repayment term of 25 years, however you can shorten this as long as you’re financially able to pay off the higher monthly repayments.
By reducing the repayment term, you will pay slightly more on your monthly mortgage repayments however you will save on interest payments in the short and long term. To find out an affordable repayment term for you, speak to your lender or mortgage broker.
Increase the frequency of your mortgage payments
One of the easiest ways to pay off your mortgage faster is by making your repayments on a fortnightly basis. Sound too good to be true? Let us explain.
Firstly, by paying off your mortgage every two weeks, you’ll feel less of a blow each month with smaller, more manageable payments. Also, there are 26 fortnights in a year, as opposed to 12 months, and so you will effectively be making 13 monthly payments each year, which has a big impact.
Mortgages can often feel like a huge financial burden, but by getting a good grasp of your outgoings and reviewing your mortgage details, you’ll feel more in control in no time.