- Pay off more
The easiest way to reduce the time it’ll take to pay off your loan is to up your standard payments. It doesn’t have to a huge amount more, just an extra $20 a week helps. By paying off more at the beginning you’ll be bringing the total down, reducing your interest quicker and you’ll start paying off your principal (amount borrowed) sooner.
- Pay a lump sum
Upping your payments may not be financially viable at the moment because of other expenses that may require your attention in the future, e.g. a new roof on your home. In this circumstance continue to pay your normal repayments till your fixed term ends and pay a lump sum amount then. This will help reduce your borrowed amount quicker. (Not all home loans allow for lump sum payments - check before doing this as there may be fees involved).
- Save on interest repayments
By setting up an ‘offset account’ with part of your loan, you’ll only be charged the outstanding balance minus the linked account/s. What this means is, if your loan is $300,000 and your linked offset account has $10,000 in it, you’ll only be paying interest on the difference, $290,000. Want to read more about Offset Home Loans? Click here to read more about Offset Home Loans.
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