Did you know the word ‘mortgage’ originally comes from the Latin word ‘mortuus’, meaning dead and the French word ‘gage’ meaning pledge? In other words, a debt you have until death. The good news is, it doesn’t have to be this way. Here are a few small changes you can make to your mortgage structure to pay it down faster.
- Increase your payment frequency
Most lenders will calculate your loan repayments on a monthly basis, but you also have the option to make fortnightly or even weekly payments if you wish. Doing so means you are paying less interest and more of the principal of the loan. A simple, yet effective change you can make than can save you thousands!
- Target the principal early
For the first few years of your loan, your interest will be at its highest and for a while it may feel like you are treading water, only being able to pay the interest. The best thing you can do is try and knock some of the principal off early. Whether that’s throwing your tax return, work bonus or anything extra at it to get it down, you will save lots in the long run.
- Use an offset account strategy
This is probably one of the best techniques you can apply to pay down your mortgage faster. An offset account is a transaction or ‘savings’ account attached to a home loan. The balance of your offset account is taken away from the principal remaining on the loan. This mean you are paying less interest on the principal of the loan overtime. The more you can contribute to your offset account, the less interest you pay on your principal and the more you save.
For more help and advice, contact one of our expert Financial Advisors today.