Tag : refinance

How To Pay Off Your Mortgage Faster

When was the last time you looked closely at your loan, the progress you are making on paying it off and how it compares to others in the market? Analysing your mortgage could mean savings for you, as well as the opportunity to pay it off more quickly, invest in other assets or reach financial freedom sooner.

Make smaller payments, more often

To cut the size of your payments, make more of them. This could even see you pay off your loan faster, and therefore pay less interest overall.

If you pay your mortgage monthly, consider changing to fortnightly repayments. For example, if your mortgage equates to $2400 a month, cut this in half and pay $1200 each fortnight. As well as having more manageable payments to make, by the end of the year you will have paid off $31,200 rather than $28,800.

Pay just a little bit extra

A minimum repayment is just that – for most loans there is no reason you can’t pay more, whether here and there or regularly.

By rounding up to a full number or contributing an extra $100 or even $10, you’ll significantly reduce your mortgage. It may also be worth considering putting all bonuses, tax returns and gifts into your mortgage.

Don’t decrease repayments when interest rates fall

Even if your repayments are lowered when fees and interest rates decrease, it doesn’t mean that’s all you have to pay and, by keeping your repayments at the same level when interest rates are lower, you will pay down more of the principle with each payment and make speedy progress on your loan.

Offset it

If you can, use an offset account. A mortgage offset account is linked to your loan and the interest payable on the loan from month to month is calculated by deducting what is in your offset account from your current loan. For example, if your mortgage is $500,000 and your offset account has $10,000 in it, you will only pay interest on the remaining $490,000.

An offset account will save interest while still giving you access to your savings. It also means investors can preserve the tax deductibility of the mortgage.

Find a better deal

Ultimately, your mortgage needs to suit you and your circumstances, or you will wind up paying too much. If you think your current loan no longer matches your situation, speak to us. We will be able to find the right product for you, as well as negotiating appropriate rates on it.

Of course, it is important to make sure that your lender doesn’t charge fees for extra repayments, refinancing, or any other steps you take in an attempt to save on your loan. We will be able to provide details and make sure you have a loan that lets you pay down your balance sooner.

If you want to pay off your mortgage faster, have a chat with us now, we have the expertise to make sure you aren’t paying too much and are in a loan that suits you.

Case Study: Keeping The Home Despite Family Difficulties

The stakes were high for David and Karen, who were dealing with a child’s ill health and, as a result, extreme financial and emotional stress.

David and Karen were facing a number of difficulties in their life. First, their second child had fallen seriously ill. The family was regularly flying interstate to a Melbourne hospital for the best treatment available, leading them to require time off work. Ultimately, the situation began to take a toll on their finances and they were struggling to juggle their mortgage and three overdrawn credit facilities.

Not surprisingly, it was also taking its toll emotionally and Karen developed depression, which led to further time away from work. That’s when their friends referred them to an MFAA accredited finance broker.

“David and Karen were robbing Peter to pay Paul. Not only were they staring down the barrel of losing their home, but they were battling the very challenging emotional strains of caring for an unwell child and a partner with depression,” their credit adviser recalls.

In such extreme circumstances, the adviser employed the services of a debt collector for the first time. While the fees were hefty ($550 was payable on each refinanced facility, as well as 15 per cent of the total amount saved), it was imperative that the financial stress on the family was resolved as quickly as possible.

“It was a non-conforming situation, so I decided the debt collector was the simplest step to take,” says the adviser. “He negotiated their collective credit card debt down from $48,000 to one payment of $15,000. I then arranged for a property valuation to be done and started to work backwards from there.”

The credit adviser was also able to refinance David and Karen’s home loan, negotiating far more manageable repayments that avoided them losing their home.

“This course of action not only enabled David and Karen to return to full-time work, but also saved their family home,” says the adviser. “They were faced with losing their house and their health, but after working together with a lender and debt negotiator, we were able to turn their lives around.”

David and Karen’s child has recovered and the family is now looking forward to what the future holds.

If you ever find yourself in a difficult situation it’s best to get on the phone and give us a call right away. We can offer you the right advice for your needs.