Luckily, we\u2019ve got a range of practical tips to help you pay down your mortgage ASAP, so, let\u2019s get into it.<\/p>\n\n\n\n
Review your rate regularly<\/h2>\n\n\n\n
We\u2019re big advocates for being proactive about your mortgage, and that means reviewing your rate on a regular basis. That\u2019s because your home loan shouldn\u2019t be a set and forget debt, and there are plenty of opportunities to refinance and secure a better deal over the life of your loan.<\/p>\n\n\n\n
The biggest benefit of accessing a better rate is saving big on interest. The less you pay in interest, the sooner you\u2019ll be able to pay down your principal (your original loan amount). Plus, that means you\u2019ll build equity faster to help you grow your wealth (and potentially help you to fund things like investing in shares or securing an investment property).<\/p>\n\n\n\n
**Lifehack** Don\u2019t adjust your repayments to the new minimum following a rate reduction (as long as your comfortable making them) to pay your loan principal down even faster.<\/em><\/p>\n\n\n\n But, your options for switching products or lenders depends on what type of rate you secure when you take out your loan. <\/p>\n\n\n\n Not all home loans are created equal. While it\u2019s important to weigh up the interest rates of different loan options, understanding the fees and charges associated with each loan is essential too.<\/p>\n\n\n\n Each loan product and lender will charge different rates for upfront costs (such as establishment fees and valuation fees) as well as ongoing charges such as monthly or annual fees. The higher the fees, the more you pay over the course of your mortgage. <\/p>\n\n\n\n That\u2019s why switching to a cheaper loan product can help you pay down your mortgage faster. That could mean moving to a new lender or simply switching to a new product from the same bank. <\/p>\n\n\n\n To help you understand all your options, working with a mortgage broker can be a helpful way to look beyond the big banks and find more competitive rates and cheaper loan products suited to your needs and financial situation. <\/p>\n\n\n\n You\u2019ve probably heard about the importance of using an offset account (a transaction account linked to your home loan) to lower the amount of interest you pay. But, are you using your offset account to its full potential?<\/p>\n\n\n\n The more cash you have in this account, the less you pay in interest. Plus, you can easily access this money again if you need it in the future (so it\u2019s not locked away for good). <\/p>\n\n\n\n Let\u2019s look at an example: say your home loan is $450,000 with an interest rate of 5%. With $50,000 in your offset account, you\u2019d only pay accruing interest on $400,000 of your home loan. That means you\u2019ll pay $20,000 in interest per annum instead of $22,500 (saving you $2,500 each year - which you can put towards paying off the principal of your loan). <\/p>\n\n\n\n The frequency of your repayments can make a big difference in how quickly you pay down your mortgage. <\/p>\n\n\n\n Here\u2019s why: the interest on your loan is calculated daily. So, by switching your repayment frequency from monthly to fortnightly repayments, you\u2019ll lower the loan amount (and how much you pay in interest) and shorten the term of your loan.<\/p>\n\n\n\n So, let\u2019s talk numbers. Say you\u2019ve got a $500,000 loan paid over 30 years. At an interest rate of 3%, you\u2019d pay $258,573 in interest over the life of your loan. But, if you managed to pay down your loan in 20 years, you\u2019d only pay $165,191 in interest. That\u2019s over $93k extra in your back pocket!<\/p>\n\n\n\n In a similar vein, making additional repayments can be a powerful strategy to get on top of your mortgage sooner. <\/p>\n\n\n\n Consider using any surplus cash, commissions or bonus money to make extra home loan repayments. Every dollar counts and will help get you closer to the finish line, sooner.<\/p>\n\n\n\n The way you structure your loan has a big impact on how much you pay and how quickly you pay it off. While an interest-only loan might be a cost effective way to get into the market, it\u2019ll take significantly longer to pay off your mortgage with this loan structure. <\/p>\n\n\n\n Instead, it\u2019s worth considering a principal and interest loan that means you\u2019re chipping away at the original loan amount as well as an interest at the same time. <\/p>\n\n\n\n In some cases, it can be helpful to use a 55 day interest-free credit card to help you pay down your mortgage as soon as possible. But, it\u2019s important to be aware of the costs you may incur if you don\u2019t pay off the card in full before this period ends. <\/p>\n\n\n\n By using this credit card to pay for your monthly expenses, you can maximise your offset account balance performance. That\u2019s because your money will remain untouched and will continue reducing how much you pay in interest. <\/p>\n\n\n\n The key is to ensure you pay off the credit card within 55 days to ensure you don\u2019t get hit with interest charges. The benefit here is you\u2019ll save in interest on your loan, and may even accrue Frequent Flyer points while you\u2019re at it. <\/p>\n\n\n\n Last, but certainly not least, is our final tip: debt consolidation. It makes sense: by bringing all your debts into your mortgage you\u2019re paying just one set of fees and interest charges. Plus, you have a clearer picture of your financial position and how close you are to paying everything off.<\/p>\n\n\n\n This means looking at all your high interest debts that aren\u2019t tax deductible (such as personal loans and unpaid credit cards) and consolidating them into your mortgage to score a lower interest rate. <\/p>\n\n\n\n With less spent on interest, you\u2019ll be able to put these extra funds towards paying off your home loan faster. <\/p>\n\n\n\n The key to paying down your mortgage as soon as possible is to be proactive about your home loan. By regularly reviewing your rate, making more frequent repayments and even taking extra steps like consolidating your debts, you\u2019ll be in the best position to score the most competitive loan, speed up your repayments and save big over the loan term.<\/p>\n\n\n\n The finance information contained in this post is general advice only, and doesn't take into account your personal circumstances or goals. You should always reach out, or seek professional advice, before making any financial decisions.<\/p>\n","protected":false},"excerpt":{"rendered":" Being proactive about paying down your mortgage can save you thousands over the life of your loan - and here\u2019s how to do it.<\/p>\n","protected":false},"author":95,"featured_media":21324,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[33,7,8,5,1],"tags":[],"financial_goals":[22],"class_list":["post-21322","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance","category-first-home-buyer","category-investments","category-refinancing","category-uncategorised","financial_goals-pay_mortgage_down"],"acf":[],"yoast_head":"\n
<\/li>Change to a cheaper loan product <\/h2>\n\n\n\n
Use your offset account to its full potential <\/h2>\n\n\n\n
Make repayments more frequently <\/h2>\n\n\n\n
![\"How](\"https:\/\/www.purefinance.com.au\/uploads\/2021\/08\/Mortgage_Quote-scaled.jpg\")
<\/figure>\n\n\n\nMake extra repayments<\/h2>\n\n\n\n
Pay off the principal (not just interest)<\/h2>\n\n\n\n
Leverage the benefits of a credit card<\/h2>\n\n\n\n
Consolidate your debts<\/h2>\n\n\n\n
\n\n\n\n