There are many issues that home owners come across when paying off their mortgage.
Modern media is bombarding us with the latest tips, tricks and schemes often leaving us confused. The information presented to us either conflict with one another or doesn’t work in practice. People don’t know where to start, or try bad advice and give up Best Car Loans.
Another issue is people tend to live above their means and use debt to fund their lifestyle. They are spending more money than what they are earning. It is common for people to use their credit card to buy furniture or a new car. They should instead only use loans to fund investments and a home.
Unfortunately this lifestyle doesn’t help save money on your mortgage and needs to change.
What can people start doing now to save money on their mortgage?
Make Extra Repayments. By paying a little extra off your home loan each month you can save massive amounts on your loan. For example, imagine you have a $500,000 home loan at a 7% interest rate. If you pay an extra $100 a month on your mortgage you will save 2.7 years off your loan, and over $75,100. Small payments now will mean big savings in the future.
Refinance Your Loan. By refinancing your loan to a lower interest rate you can save thousands on your home load. Using the same example as above, imagine you changed to an interest rate of 6.9% on your $500,000 home loan. You still continue to make the old repayments that you made when it was at 7% and, as a result, you save over $38,800. Even 0.1% off your interest rate can make a big difference towards saving money on your mortgage.
Set Up An Offset Account. An offset account is a normal cheque account that is linked to your loan. If you had a $100,000 loan and had $10,000 in offset, then you will only be charged for the $90,000 instead of the full $100,000. Again, if we have an offset account with our $500,000 home loan at 7% interest rate, and had $3000 in an offset account, we could save $7200 over the term of the loan.
*Please note this may not be available in all countries.
By applying these 3 simple tips to save money on your mortgage you can be sure to save thousands of dollars and cut years off your home loan.