Best Strategies To Pay Off Your Mortgage Sooner Or On Time

Best Strategies To Pay Off Your Mortgage Sooner Or On Time

Read time: 3 minutes, 45 seconds.

So you now have your dream home. You worked hard saving up your deposit over a few years. You got your loan and you’ve been steadily making your monthly repayments.

The thing is, debt is debt whether it’s your mortgage or not. You don’t want this debt hanging over your head too long. Mortgage terms usually go up to 30 years. How can you make sure that you pay off your mortgage loan sooner?

So you now have your dream home. You worked hard saving up your deposit over a few years. You got your loan and you’ve been steadily making your monthly repayments.

The thing is, debt is debt whether it’s your mortgage or not. You don’t want this debt hanging over your head too long. Mortgage terms usually go up to 30 years. How can you make sure that you pay off your mortgage loan sooner?

Between September and November of last year, 20% of Australians with a mortgage to repay were at high risk of mortgage stress. Many people lost their livelihoods in 2020 or had to scale back on a lot. For some, that might have been their mortgage repayments.

While it might seem daunting to be staring down a large loan for the next 30 years of your life, you can pay it off sooner.

Let’s be honest. You don’t want to have this debt in your golden years.

why repay your mortgage sooner?

  • Complete property ownership

The obvious benefit is the fact that you will fully own your property. Once your mortgage repayments are done, your home will be all yours. The bank, debt collectors, or money lenders will no longer have a say in monthly finances.

  • You will save money

Paying off your mortgage early is not just for your peace of mind. Take this step and save some money. When you repay your mortgage sooner, you also end up paying less interest on your loan.

  • Free up your finances

One less bill frees up capital you can channel elsewhere. Maybe you have a hobby you’ve been neglecting or a well overdue vacation. Whatever it is, freeing up some cash will always take some of the strain off your bank account.

Now that we understand what you can gain from repaying your mortgage sooner, let’s look at how you can get there.

Bulk up your payments

Putting a little more on your regular repayment amount makes all the difference. If you want to save tens of thousands in interest, then pay more on your installments.

According to the Commonwealth Bank, paying as little as 17% extra on your repayment installments can cut down the lifetime of your loan by 6 years. Think about how much you will be saving on interest.

Lumpsums

Sometimes a little extra cash falls into your hands. Instead of squandering it, put it towards your mortgage repayments.

Lump-sum payments can work wonders on your mortgage period and the amount of interest that you owe. When you make more lump-sum payments earlier in your mortgage lifetime, you end up paying way less than what was initially forecasted.

Get the best possible interest rate

Even if you are already repaying your loan, you can still negotiate a better interest rate. Let’s say you find another lender that has a better rate than what you are currently paying. Let your bank know about it. Getting a better rate is a big win for your savings.

The truth of this matter, though, is that many institutions don’t want to do something like that. So in that case, you can start looking for a new lender and switch to a different loan. Just make sure that if you choose to go this route, you are getting a better deal all around. 

Don’t hesitate to ask about any fees or charges that you could incur should you try to exit your original loan. Extra fees can add up. Remember, we’re trying to save money, not spend more.

Get a mortgage offset account

According to Moneysmart, if you can’t keep over $10,000 in your offset account, then this tip will not be the best for you.

pay fortnightly instead of monthly

If you’re currently paying monthly, switching to fortnightly is a good way to bump up your repayments without breaking the bank. 

The benefits are long-term but worth it. A year has 26 fortnights. So if you split your monthly payments in two, you’ll end up paying off an extra month’s payment each year. For a 30-year loan, you could end up shaving off 2.5 years.

Communicate with your lender. It’s in your best interest to find out the best path to owning your home sooner.

If you need any assistance negotiating better rates, reach out to our team at MLS Finance.

🌐 Website: Get in touch

📞 Call: 02 9635 1888

📩 Email: enquiries@mlsfinance.com.au

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