We’re often asked one important question: what’s the secret to paying off a loan as quickly as possible?
Sadly, there’s no secret manual known only to bank executives.
But, happily, there is one basic premise that can wipe years off home loan repayments: make payments weekly or fortnightly instead of monthly.
It works this way: the more regular payments ensure that you make the equivalent of 13 months’ worth of repayments each year. There are 52 weekly payments or 26 fortnightly payments as opposed to 12 monthly payments.
And, because interest is calculated daily but charged once a month, you are getting ahead of the target. Your principal reduces and, therefore, so does your interest payments.
That turns a 30-year loan in a 24-year loan. You can spend the next six years going on those overseas holidays or investing in a new hobby in the house that you know own.
There are other methods that people often declare as mortgage-savers: offset accounts, direct salary services and accounts tied to credit cards. Each of them holds benefits, but there remains a simple fact: if you don’t have spare cash, it doesn’t really matter.
Paying off your home loan as quickly as possible comes down to discipline and regular repayments. We’ve seen it plenty of times among Home Loan Connexion clients. The regular payer continues to draw further ahead of the target.
We can talk to you anytime about the best options for your loan. Call us anytime on 1300 888 299 or contact us here.