5 Easy Ways To Pay Off Your Mortgage Faster
Paying off your mortgage early not only saves you money but also lightens your financial burdens. If your aim is to eliminate your mortgage to free up resources for home improvements, investments, or simply to enhance your lifestyle, achievable strategies are within reach. Sometimes, all it takes are minor yet smart adjustments to your financial routine.
Here are our 5 tips to paying off your mortgage faster:
1. Optimise Your Repayment Schedule
Switching from monthly to fortnightly payments can significantly accelerate your mortgage payoff. This approach exploits the calendar to your advantage, squeezing in the equivalent of one extra month’s repayment each year due to the 26 fortnights. This seemingly small adjustment can shave years off your mortgage term, saving you a substantial amount in interest.
2. Extra Payments: Small Sums, Big Impact
Any additional amount paid towards your mortgage can make a difference. Whether it’s through tax refunds, bonuses, or even small windfalls, extra payments directly reduce your principal balance. The initial years of a mortgage are heavily skewed towards interest payments; early additional payments can dramatically decrease the total interest paid over the life of the loan. Before making extra payments, it’s wise to check with your lender for any applicable fees.
3. Seek More Favourable Interest Rates
Regularly reassessing your mortgage to ensure you have the best possible interest rate can lead to significant savings. Comparing your current loan features with available options in the market might reveal opportunities for lower rates. Should you find a more attractive rate, negotiating with your existing lender or switching to a new one could be beneficial, provided the savings outweigh any associated fees.
4. Leverage Higher Repayment Rates
Committing to higher repayments, as if your interest rate were higher, can significantly reduce your mortgage term. This strategy is particularly effective when interest rates decrease, allowing you to maintain high repayment levels and thus pay off the principal faster. If you manage to secure a lower rate, continue making payments at the higher rate to expedite your mortgage payoff.
5. Utilise an Offset Account
An offset account can be a powerful tool in reducing the interest charged on your mortgage. By linking a savings or transaction account to your mortgage, the balance of the offset account is deducted from the principal amount owed, reducing the interest calculation base. This mechanism not only lowers the amount of interest you pay but also shortens the duration of your mortgage. At United Global Capital, our team of experts are dedicated to providing personalised strategies that align with your financial goals, especially when it comes to managing and paying off your mortgage. Contact us today to explore how our bespoke financial strategies can accelerate your progress towards paying off your mortgage and achieving broader financial goals.
