Interest rates may be low, yet are you getting the benefit?
Compare your home loan with a low rate and see what you can save in interest. What difference will it make to your home loan, if you could save just over half of one percent, in interest, per year? It doesn’t sound like much, yet the results are surprising. Speed up repaying your home loan in 3 simple steps.
1. Compare your home loan and refinance to a cheaper home loan.
We’re stating the obvious here, yet have you looked at your statement recently, do you know what rate you are paying ? I suggest you do that right away and use our calculators here to compare your home loan with a lower rate. Chances are that if you took a home loan out only three to four years ago, then you are probably paying too much.
Lets compare home loans, one is lower by 0.6%:
Home loan 1 of $450,000 interest rate 4.75% and a minimum monthly repayment of $2,347
Home loan 2 of $450,000 interest rate 4.15% and a minimum monthly repayment of $2,187
Interest saved $57,581
This simple step, refinancing you home loan to a lower rate by just 0.6%pa will save you thousands in interest.
Let’s face it, why pay the banks more when you don’t have to?
Take the next step and contact us, we’re experts when it comes to home loans. We know the home loan market back to front.
We work for you and not the bank!
2. Continue making the the old repayment, not the new lower one and pay fortnightly.
Set repayments back to the amount you were previously paying.
Because your new loan has a lower rate, the bank will automatically set your repayments lower, so set it back to what it was, you have adjusted your lifestyle around the old repayments so why change?
Divide your monthly payment by 2 and pay that amount each fortnight.
This effectively adds an extra repayment each year, so you are now making the same as 13 repayments over a year. Use our how long to repay calculator here.
In this example $2,347 monthly payment divided by 2 = $1,173 new fortnightly repayment represents an increase of $90 per fortnight to your repayments.
Interest Saved $126,252
Time saved 7 years and 3 fortnights
3. Use a Mortgage Offset Account
A mortgage offset account will effectively reduce the balance of your home loan by the amount of savings held in the offset account.
Every day that you have money in your offset account, that amount will save interest on the corresponding loan balance. Use our offset calculator here. Put any windfall amounts in the offset account such as bonuses and tax refunds. Most offset accounts come with a linked everyday transaction account with visa debit cards. You can bank your income and pay your bills. The more you save in the offset account the greater the savings on your home loan interest bill.
Interest Saved $45,891 by maintaining a balance of $20,000
