A mortgage structure can be the largest financial burden on a family whilst they are looking to buy a home or investment property. Before searching to find the right property, it is essential you have your finances in order. Here are 5 Tips to ensure you pay your mortgage just that little bit quicker.
1. Structure a mortgage to the lowest possible length for your repayment schedule: If you restructure your loan from a 25 year loan to a 15 year loan the implications can be huge. Whilst you will be paying a larger amount for those 15 years, you will save yourself on all of the interest you would be paying for the further ten years. This could mean that on a loan of $500,000 if you paid it off over 25 years at 7% it would cost you $745,000 in interest alone! if paid off over 15 years that interest cost will drop to $525,000
2. Refinance your current loan: It's amazing how many people become content with their loans and don't amend them. In a competitive banking market, a quarter of a basis point can make a big difference when it comes to repayments. Shop around and if you have confidence in the trends of interest rates find a mortgage that will hold up over the long term and invest in buying the right mortgage. Buying the right mortgage can be as cost effective as buying the right house.
3. Turn your monthly payments in to bi-monthly payments: Whilst most people pay per month it can be cost effective paying every 2 weeks. If your mortgage costs you $1,000 per month, the benefit of paying $500 every two weeks can mean that you make 26 repayments per year meaning you can pay essentially one month more off your mortgage per year.
If you have any further mortgage solutions we would love to hear from them - tweet us at @homelyau