Tips for paying off your Home Loan sooner

By Founder and Chairman of Aussie, John Symond

With interest rates still not far off their lowest levels for up to 40 years, owner-occupiers and investors should be looking to accelerate the process of paying off their mortgages.

These low rates won’t last forever, however I do not expect them to rise any time soon as the unemployment numbers continue to grow and the upcoming financial reporting season will show that the economy is subdued, with some sectors suffering from a fall-off in activity.

Pockets of real estate will continue to show some growth, especially in the first home buyer areas, however generally prices are expected to remain subdued for at least another year in most capital cities.

Notwithstanding the local credit crunch, there are still plenty of home loans in the market offering attractive rates and other features to help borrowers attain home ownership with affordable mortgages.

However borrowers need to do their homework, as it is now a very complex decision to refinance a mortgage as there are hundreds of loans in the market to choose from.

Some initiatives you should consider in paying off your mortgage include:

• don’t over-borrow at the outset as the low rates won’t last forever.
• seek fortnightly payments, not monthly, so the interest repayments work faster to reduce the mortgage;
• an extra $20 in repayments each fortnight can save thousands of dollars in interest savings;
• lump sum payments (even small ones) into a loan can make a substantial difference, reducing the overall loan term and amount;
• start an offset account where savings accounts can be linked to the home loan and give up paying fees or any ongoing charges.
• if rates fall again, keep your payment levels at the same rate as the extra money will cut straight into your principal.
• if you want to fix your rates, ensure part of your loan remains at a variable rate.

There are many products out there, including Aussie’s own loans, which do not attract monthly charges. There are also many lenders now offering very attractive features and discounted interest rates.

Remember Aussie now has more than 800 accredited mortgage brokers and 140 Aussie Stores to service your needs.

< Back to Latest News Index