You have finally purchased a home of your own. For so many years it seemed to be like a dream always just a little out of reach. What happens next? You do not need to be shackled to your home loan for 25 or 30 years. Here are some useful tips to help you pay off your mortgage sooner and achieve “true home ownership”.
Avoid Honeymoon Offers
Many lenders use introductory or honeymoon rates as marketing tools to attract new borrowers. You are initially offered a cheap rate on your loan to get you in the door but once the honeymoon period is over, the lender will switch you to a higher variable rate of interest.
To understand the true interest rate you end up paying with a honeymoon product – look at the advertised comparison rate on such a loan. Invariably you pay less today but more in the long run.
Pay more to get ahead
It is a very simple concept to grasp – the more you pay off your mortgage every month the faster you will pay off your loan. Most people think in terms of making sure they pay just enough to cover their set repayments. By doing this you will keep your mortgage for the full loan term of 25 or 30 years. The key to paying your loan off faster is to make as many ‘extra’ repayments as you possibly can.
Increase the frequency of your repayments
One of the simplest and best strategies for reducing the term and cost of your loan (and thus your exposure should interest rates rise) is รถยนต์มือสองเชียงใหม่ to make your repayment on a fortnightly rather than monthly basis. By splitting your monthly repayment into fortnightly you will effectively be repaying the same annual amount but your outstanding loan balance will reduce faster.
Amazingly enough, this change can cut thousands of dollars and years off your mortgage.
The reason for this is that there are 26 fortnights in a year, but only 12 months. Paying fortnightly means that you will be effectively making 13 monthly payments every year. And this can make a big difference.
Have you considered a professional package?
Most lenders offer a range of professional packages to clients who are prepared to pay a small monthly fee. These packages offer a reduction to the standard variable interest rate, can come with a cheaper home insurance, fee-free credit cards and a number of other options.
Consolidate and save
If on top of your home loan you also have other outstanding loans such as a personal loan, credit cards, car loans etc. – by consolidating all your other outstanding loans into your mortgage you can generally significantly reduce your overall loan obligations and hence have more funds available to apply to your mortgage.
Many lenders will allow you to re-finance – your other debt under the umbrella of your home loan. This means that instead of paying 15 to 20 per cent on your credit card or personal loan, you can transfer these debts to your home loan and pay it off at a home loan rate.
Utilize your available equity
Home equity is the difference between the current value of your property and the amount you owe the lender. For example, if you have a property worth $500,000 on which you owe $200,000, you are said to have home equity of $300,000. In most cases you should be able to establish a line of credit or a home equity loan to access these funds.