Home ownership: The Australian dream.
Paying off your home loan early: The true Australian dream!
Every homeowner dreams of paying off their mortgage as early as possible, but with years ahead of you, increasing house prices and rising interest rates, is it even possible to pay off your mortgage early?
Fortunately, it’s not impossible but it does require strategic financial planning and regular reviews of how your current system and payments are working to get you debt-free as soon as possible.
It’s all a matter of exploring your options, and making smarter financial decisions, so you can put an end to your debts faster than you may have thought possible. Here are a few techniques you may want to try:
Tip #1: Refinance
If you’ve held your home loan for longer than 2 years, it may be worth considering refinancing.
Refinancing is the process of getting a new home loan with a different mortgage lender to replace your existing loan. Refinancing can expand your horizons and give you access to more money-saving opportunities.
You’d go through a similar process to when you first applied for your loan, but you may be able to get a better deal because many lenders are often only offering their cheapest rates only to new customers.
If you switch to a new loan, you may be able to access your home equity which you can use to:
- Borrow additional funds to renovate their home
- acquire funds to holiday/purchase a new car
- Purchase an investment property for additional income which can help you pay off both home loans quicker.
Tip #2: Make Extra Payments More Regularly
If you’re not comfortable with the idea of refinancing your mortgage, or if you’re already on a good payment schedule that you don’t think you will get a better deal, you can still make extra repayments if your home loan allows it.
Additionally, if you make more regular payments (ie. weekly or fortnightly) instead of monthly, this will save you on interest. While this is only a small amount, over time, it does add up.
Besides paying extra regular repayments, you can also choose to make an extra lump sum repayment. This can be ideal if you have recently:
- Recently received a bonus from work
- Received a large inheritance
- Left a job and received a large payout of annual leave etc.
Tip #3: Invest Your Money to Build Your Financial Wealth
We often hear the question, “Should I invest or pay off my mortgage first?”.
While there is no right or wrong answer, it all comes down to your personal goals, what would give you more comfort and peace of mind and of course – the financial benefits.
Paying off your home loan quickly will help reduce the total amount you spend on interest, but it’s not necessarily a bad thing to maintain your mortgage for its full term if you put those additional funds to good use – such as towards investments that generate higher returns.
Investing your money is a great way to build your wealth. If you have an investment income stream that covers your mortgage repayments, you can use your other income streams to pay more off your mortgage and pay off your home loan quicker!
Explore Different Ways to Pay Off Your Mortgage Early with Cambio Group
By taking these next steps, you can pay off your mortgage faster than you expected.
Any one of these options could work for you, so don’t be afraid to try different methods to see which one works best for you.
How Can We Help You?
Dealing with your finances can be difficult, especially with interest rates and inflation rising. That’s why it’s worth navigating your finances with a financial planner.
Cambio Group’s financial planning team help individuals with their retirement plans, thanks to our team of expert financial advisors. Reach out to us today.
Disclaimer: The information (including taxation) in this website does not consider your personal circumstances and is of a general nature only – unless otherwise stated. You should not act on the information provided without first obtaining professional advice specific to your circumstances.
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