WEALTH HUB JOURNAL

6 Ways to Pay Off Your Home Loan Faster

According to the Australian Institute of Health and Welfare, in 1996, 42.8% of Australians were homeowners without a mortgage. In 2018, that percentage decreased to 29.5%. These days, Australians are taking out more home loans (or renting).

If you are a part of this growing percentage, you probably want to pay off your home loans as fast as possible. You can become one of the lucky few mortgage-free homeowners more easily and quickly than you may believe. Keep reading to find out how.

Note: Before you make a plan to pay off your mortgage early, check with your mortgage company. Some mortgage companies are strict about when they will accept payments, and some even charge prepayment fees.

Pick your lender wisely

Picking your lender wisely is the most important tip of all; however, it’s only applicable if you haven’t yet taken out loans (though it’s never too late to rethink your lender). Finding the right lender is vital to how long and how much you will be paying in terms of your mortgage.

To find the best lender, you’ll want your credit score to be in tip-top shape. Next, you get to navigate the lending landscape, choosing between credit unions, mortgage bankers, and correspondent lenders.

Do your homework. Above all, steer clear of interest-only loans. Look for low interest rates, of course, but you’ll need more info in order to narrow your choices. Ask your friends and family for a referral. Read reviews online. Finally, ask plenty of questions before you pull the trigger.

Pay off your highest loans first

Since your principal is highest at the start of your loan, in the first few months or years of a loan, you’ll mostly pay interest. And, of course, the higher the principal, the higher the interest. For this reason, you’ll want to pay off those costlier debts first. This way, you’ll avoid the accumulation of higher interest, saving you money and helping you clear your debts faster.

Budget, budget, budget!

This one’s a no-brainer, and yet, it’s never as easy as it sounds! We all know we’ve got to spend less and save money in order to pay off our debts; however, it’s much easier said than done. There are countless ways to budget, and the key is to find what works for you, your lifestyle, and your goals.

Make biweekly payments

Making biweekly payments is a useful trick for paying off your home loans faster if your mortgage company allows. Rather than making the usual monthly mortgage payment, pay partial payments biweekly. This is a great way to pay more towards your mortgage each year almost unconsciously. The trick is that, by paying biweekly rather than once a month, you end up paying the equivalent of 13 monthly payments per year.

If you get paid every two weeks, this may be a convenient choice for you.

Make extra payments when you can

In the same vein as making biweekly payments, you can also make more conscious payments towards your mortgage. Make one extra payment every year or put your tax refunds towards your home loans. Both of these are good milestones for keeping track of your extra payments.

Refinance your mortgage

Lastly, you can choose to refinance your mortgage for a shorter-term option. In addition to helping you pay off your home loans sooner, this may help you find lower interest rates. Remember that your new interest rate should be 2% or 1% (with more expensive loans) to be worth the switch.

Still not sure how to pay off your home loan faster? Wealth Hub Australia has selected the crème de la crème of accounting firms as our partners. We can offer you superior, individually tailored accounting service referrals that work with your current financial situation and goals easily and effectively. Get in touch with us today to achieve your financial and lifestyle potential!

*Our officers, employees, agents, and associates believe that the information and material contained in this handbook is correct at the time of printing but do not guarantee or warrant the accuracy or currency of that information and material. To the maximum extent permitted by law, our officers, employees, agents, and associates disclaim all responsibility for any loss or damage which any person may suffer from reliance on the information and material contained in this handbook, or any opinion, conclusion, or recommendation in the information and material, whether the loss or damage is caused by any fault or negligence on the part of our officers, employees, agents, and associates or otherwise. The information relating to the law in this handbook is intended only as a summary and general overview on matters of interest. It is not intended to be comprehensive, nor does it constitute legal, financial, or taxation advice. Whilst our officers, employees, agents, and associates believe that such information is correct and current at the time of printing, we do not guarantee its accuracy or currency. Many factors unknown to us may affect the applicability of any statement or comment that we make to your particular circumstances, and consequently you should seek appropriate legal advice from a qualified legal practitioner before acting or relying on any of the information contained in this handbook. The information contained in the handbook is of a general nature and does not take into account your objectives, financial situation, or needs. Before acting on any of the information, you should consider its appropriateness, having regard to your own objectives, financial situation, and needs.*