Record low interest rates means you've got the opportunity to pay your home loan sooner by making some extra or additional payments.
If you're on an interest rate of 3.5 per cent, paying an extra $520 per month would allow your $400,000 mortgage to be paid off 10 years earlier.
Getting into the right loan can also make it easier to get you debt free sooner. For example, shifting from your variable rate of 3.50 percent, to a 5 year fixed rate of 2.99 percent will save $112 a month on your $400,000 loan. When you move to that lower rate, keep making the old 3.5 per cent repayment, you won’t notice the difference, but it can take 3 years off the life of your loan. Use this strategy and contribute an extra $400 a month (instead of the $520 described above) and you'll find your loan paid off 10 years sooner.
Another way to get on top of your loan is to make your repayments weekly or fortnightly. In the example we're using, your monthly repayment is $1796 which looks about $450 a week or $900 a fortnight. However, making payments this way means your actual paying and extra $1888.00 to the loan. This simple adjustment to your repayment frequency save you around $37,000 in interest and 4 years off your loan.
Sure Paying extra into your loan requires discipline and motivation. But when when you have equity in property and you're freed from debt, you can start using your earning power for some serious wealth creation.
Take motivation from the goal of clearing your home loan early and the discipline by putting the whole process into autopilot Set up a recurring direct payment to your home loan for the day that you get paid, both for the regular payment plus the extra that your budget says you can afford.
Call Jaeneen on 0402 684 199 and let's have a chat about how you can become debt free and on the path to greater wealth sooner.