The challenges facing consumers in today's economy have taught valuable lessons about the importance of reducing debt obligations. Regardless of the state of the economy, each person should be actively trying to reduce their debt, including the amount they owe on their home loan. Borrowers can save thousands of dollars in interest payments and knock years off of their mortgage loan if they play their cards right. If the thought of trying to pay off your home loan early is daunting in this economic climate, you are not alone. Homeowners throughout Australia continue to struggle with the constant changes in the housing industry. Nevertheless, if you are able to implement the following home loan tips, you may be able to pay off your home loan early and eliminate one of your major financial obligations.
Review loan terms
You cannot make progress paying off your home loan early if you are not familiar with your loan terms. It is not enough to know how much you have to pay each month or your remaining balance. You must understand how your loan terms affect your payments and use this information to compare other mortgage loans currently available. If you find loan terms that are better than those you currently have, you may have to make important decisions regarding your loan servicer to truly save the most money and pay your mortgage loan off in less time.
Resist shorter loan periods
If you are taking on a new loan or refinancing an existing mortgage, your strategy may include opting for a shorter loan period to repay your mortgage debt sooner. This is not advisable, especially in the current market where homeowners do not know from one day to the next what changes may impact their finances. Instead opt for the full 25 year loan term (as long as early payment is an option) and use other strategies to shorten the life of your mortgage loan.
A redraw facility offers homeowners the opportunity to apply additional payments toward their mortgage loan which remain accessible for later withdrawal. Most lenders offer this loan feature which provides an easy and efficient way to apply additional payments to your mortgage loan. Additional payments applied to your loan will reduce the principal balance and interest calculations. Depending on how much "extra" you can apply to your loan, this can shorten the life of your mortgage considerably. Should you need access to your additional payments you can take that money out of your loan. To get the most out of this feature, find a redraw facility that has flexible conditions such as unlimited number of redraws per month, no minimum amount and no charge for the transaction.
Benefits of early mortgage loan repayment
Homeowners in Australia and around the globe are currently at the mercy of lending institutions and the housing market. Millions of homeowners have seen their budgets and savings stretched beyond repair as they struggle to stay in their homes. If you are able to implement the tips mentioned here to pay off your mortgage loan early, you may be able to prevent being in a similar situation in the future. In addition you will save thousands in interest payments which can diverted to other areas of your budget.Back « To Fix or Not to Fix Home Loan Interest Rates
Instantly compare home loans which suit your needs, and get the banks to work for your business.