New year, new approach to your mortgage?
If you’re in a planning mood, you might be thinking about one of the most significant financial obligations in your life – your home loan. Here are a few New Year’s resolutions to consider making to really make a difference to your financial future in 2020.
Squeeze out a few extra dollars for repayments
Any extra money you can put on your home loan payments will save you money in interest over the term of your mortgage. It might not even seem worth worrying about, but even $20 extra a week should help you become better off over time.
According to the Sorted calculator, a $500,000 mortgage at 4 per cent interest over 25 years will cost you about $610 a week in principal and interest payments, and include $291,165 in interest costs. If you increase your payments by $20 a week, you can reduce your interest bill by almost $20,000 over the life of the mortgage – and maybe more if your interest rate goes up in future.
Most lenders will allow some additional payments to a fixed-rate loan with no penalty. Of course, criteria vary from one lender to the other. If you’d like to know what your lender requires, please don’t hesitate to get in touch.
Schedule dates to check back in
It’s easy to set and forget your mortgage – especially when you have years of repayments to go. But that’s exactly why it’s important to keep your home loan top-of-mind.
Even small tweaks can have a big impact and shave years (and dollars) off your mortgage. So resolve to check in on it every six months or year, to ensure that you’re still blasting it away as fast as you can, and that you’re on track for your goals.
Understand your structure
If you’ve got one big chunk fixed on principal and interest over 30 years, you might want to resolve to think about better options.
There’s no one-size-fits-all for home loan structures, as it all depends on your circumstances. One popular structure, for example, is to split a loan up into smaller amounts, which can be fixed for different terms and spread out your exposure to different interest rates. Plus, property investors may want to choose to structure their mortgage so that they can get rid of the principal on their owner-occupied home more quickly than their investment property.
Whatever you choose to do, the key thing is to pay off your mortgage faster and reduce the overall interest you pay over time. We can help you find the right fit for your situation.
Need a hand?
As always, we are here to help and would love to get you on the right path for 2020. Please don’t hesitate to contact us if you have any questions.
Disclaimer: Please note that the content provided in this article is intended as an overview and as general information only. While care is taken to ensure accuracy and reliability, the information provided is subject to continuous change and may not reflect current development or address your situation. Before making any decisions based on the information provided in this article, please use your discretion and seek independent guidance.