We share our tips to becoming mortgage-free a bit sooner than you thought…

Purchasing a home is a significant achievement, but it’s often accompanied by a lengthy mortgage term. Paying off your mortgage faster is a goal for many homeowners, and the good news is that there are insider tips that can help you achieve this goal. In this article, we’ll explore these tips and provide a roadmap to become mortgage-free sooner.

1. Make Extra Payments Regularly

One of the most effective ways to pay off your mortgage faster is by making extra payments on a regular basis. Even small additional payments can have a significant impact over time. 

 

For example: Having a home loan of $600,000 over a 30 year term on a 6% interest rate, making an additional repayment of $50 per week. You could save up to $116,213 in total interest and pay off your home loan in 25 years and 10 months.

 

Paying an extra By paying more than your required monthly instalment, you’ll reduce the principal amount, which, in turn, decreases the total interest paid.

 

2. Align Your Payments with Your Pay Schedule

Syncing your mortgage payments with your pay schedule can make a substantial difference. If you’re paid fortnightly or weekly, consider making half of your monthly mortgage payment each time you get paid. This way, you’ll make an equivalent of 13 monthly payments each year, ultimately reducing the mortgage term.

 

3. Round Up Your Payments

Another simple yet effective strategy is to round up your mortgage payments. For instance, if your monthly instalment is $1,525, consider rounding it up to $1,600 or even $1,550. The additional amount may seem small, but it adds up over time, helping you pay off your mortgage faster.

 

4. Make Bi-weeklyPayments

Rather than making monthly payments, switch to a bi-weekly payment schedule. This results in making 26 half-payments each year, which equates to 13 full payments. It’s an easy way to reduce the principal amount and shorten your mortgage term.

 

5. Make an Annual Lump-Sum Payment

If you receive a tax refund, a work bonus, or any unexpected windfall, consider putting this money towards your mortgage as an annual lump-sum payment. It’s a great way to make a significant dent in your mortgage balance.

 

6. Set Up an Offset Account

An offset account is linked to your mortgage account, and the balance in this account is subtracted from the principal when calculating interest. By placing any surplus funds, such as savings or income, into the offset account, you’ll effectively reduce the interest charged on your mortgage, helping you pay it off faster and saving in interest payments

 

7. Use Your Bonus Payments Wisely

If you receive a bonus or commissions from work, consider using a portion of it to pay off your mortgage. It’s a smart financial move that accelerates your journey towards becoming mortgage-free.

 

8. Avoid Interest-Only Payments

While interest-only loans can be convenient in the short term, they extend the time it takes to pay off your mortgage principal. If you have the financial capacity, transition to principal and interest payments to increase your equity and reduce your mortgage term.

 

9. Salary Sacrificing Mortgage Repayments – (consult with your employer)

Salary sacrificing mortgage repayments allows Australians to reduce their taxable income and lower their tax liability. This frees up more funds to allocate towards their mortgage repayments, enabling them to pay off their home loans faster. For instance, an individual earning $100,000 per year who salary sacrifices $10,000 of their pre-tax salary towards their mortgage could potentially save approximately $3,000 in taxes annually. This would need to be confirmed with your accountant and your employer.

 

10. Refinance to a Lower Interest Rate

Interest rates fluctuate, and if you’re currently paying a higher rate, consider refinancing your mortgage. Lower interest rates result in lower monthly payments, and if you continue paying the same amount, you’ll make more significant strides in reducing the principal.

 

For example, if you have a home loan of $600,000 a discount of 0.25% on your interest rate can save you approx $1,500 per year in interest payments

 

11. Review Your Mortgage Structure

North Brisbane Mortgage Brokers can help you review your mortgage structure to ensure it’s the best fit for your financial goals. Your circumstances may change over time, and your mortgage should evolve with them. Our team can provide expert guidance on refinancing or restructuring your mortgage for optimal results.

 12. Seek Professional Guidance

For tailored advice and personalised strategies to pay off your mortgage faster, don’t hesitate to consult with North Brisbane Mortgage Brokers. We’re here to assist you in your journey to financial freedom and homeownership. Our team of experts can offer warm and friendly guidance, ensuring that you’re informed and equipped to make the right financial decisions.

 

Your Path to Mortgage Freedom

 

Paying off your mortgage faster is not just a dream; it’s an achievable goal. By implementing these insider tips and seeking expert advice from North Brisbane Mortgage Brokers, you can significantly reduce your mortgage term and take the steps towards financial freedom. Mortgage freedom is a dream worth pursuing, and we’re here to support you every step of the way.

 

Contact North Brisbane Mortgage Brokers today to learn more about these insider tips and how they can work for you. Together, we’ll create a personalised strategy that makes paying off your mortgage faster a reality.