Buying your first place is a fantastic feeling! But what comes soon after, and isn’t so fantastic, is seeing a substantial mortgage sitting against your name. A mortgage that spans 30 years!
Believe it or not, there are ways to save on your mortgage and reduce the amount of interest you pay over its lifetime. Here are three simple tips to save on your home loan.
1. Pay more, now
Don’t think you can afford to put more on your mortgage? Actually, you probably can! Lenders will generally calculate your ability to service your loan at a higher interest rate than what they actually offer you. Why? So that if interest rates go up they know that you can still afford your repayments.
So this means that you can actually afford to put a bit more on your loan than you currently are – you might just need to make a couple of lifestyle adjustments. Ditching your daily coffee or buying cheaper groceries could shave years off your mortgage, saving you big time when it comes to interest.
2. Ask for a better deal
As the saying goes, the squeaky wheel gets the oil! So don’t be afraid to call up your bank and ask for a better rate (it helps to have some quotes handy so check out some comparison sites like Mozo and Finder).
Providing you stick with your current level of repayments, doing something as simple as renegotiating your interest rate or refinancing to a lower rate, means you will save thousands in interest on your mortgage without affecting your cashflow.
3. Pay more frequently
Did you know that paying your home loan fortnightly instead of monthly you can make a pretty big impact to your loan balance?
If you divide your monthly payment in two and then pay fortnightly instead of monthly you end up paying 26 payments a year, which adds up to 13 monthly payments, rather than 12. This simple change can make thousands of dollars’ difference to your total loan repayment, cut years off your loan and it won’t have too much of an impact to your day-to-day finances.
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The information provided by Women with Cents is general in nature. It doesn’t take into account your objectives, personal financial situation or needs. Think of it as educational material in which to help you make more-informed decisions. We recommend you obtain financial, tax and credit advice specific to your situation before making any investments or financial decisions.
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