Tip #1: Make sure that your home loan works best for you
Over the years, I’ve had clients come to me after they have a home loan and its structure all wrong. As a result, they have no chance of paying it off in 10 years or less. So before anything else, you need to make sure that your loan is structured correctly.
Tip #2: Refinance/restructure your loan
If you already have a home loan in place, consider refinancing it and restructuring it correctly. Now, there’s a whole group of benefits from refinancing your home loan and structure is one of them. As well as cheaper repayments, if you’re paying less interest that means more money is going off the principal. That way your home loan is going down faster every single month.
Tip #3: Make more frequent repayments on your home loan
Consider making fortnightly or weekly repayments. This way you’ll end up making extra repayments over the course of the year. And as a result, you’re going to pay your home loan faster.
Tip #4: Look beyond the big banks
Banking with the big four is super convenient. But this doesn’t mean you need to have your home loan with them as well. There are heaps of other lenders out there in the marketplace that lead the big four for dead. They’re competitive and it’s going to help you pay your home loan off faster rather than slower.
The products are the same. The dollar from a big bank is worth the dollar from a small bank.
Tip #5: Understand how to utilize offset account
An offset account is like a transaction account linked to your home loan. Every single dollar that you have in an offset account reduces the amount of interest of home loan every month. So if you have money in an offset account, you’re paying off more principal every single month. As a result, your home loan is going to be paid off faster.
Tip #6: Make sure you’re paying principal and interest
Over the past 10 years in the Sydney Boom, a lot of people are taking out interest-only home loans. And they are not paying it off at all which doesn’t make any sense. If you have a home loan, make sure it’s principal and interest and pay it off right. This way it’s going to be cheaper.
You’re going to be chipping your way out of it every single month. When you’re talking about investment properties, it’s a bit different. But on your own home make sure you have principal and interest repayment.
Tip #7: Don’t Miss Any Of Your Repayments
Make sure you have a household budget in place. Allocate money for your repayments for every single month, fortnight, or weekly. Doing this will ensure that you don’t miss one payment every single time home loan’s going down.
Tip #8: Know How Much You Can Repay
If you’ve done a household budget and you know that you’ve got some surplus income every single month. Utilize your surplus money to make extra repayment on the loan. Compounding interest works both ways. The more money you throw at your Home Loan the faster you’re going to be able to pay it off.
Tip #9: Annual Home Loan Health Checkup
Make sure that you do an Annual Home Loan Health Checkup. This is a 12-month review to make sure that the home loan is still suitable for you and your situation. This will determine if you’re getting the best out of every single dollar that you’re committing to your home loan. It will keep you in check so, you’re on the right track of paying it faster rather than slower.
Tip #10: Make Your Home Loan A Priority
If you haven’t done anything with your loan that you place for years, chances are it’s not serving you well. For all our clients here at Aureus, we do a 12-month annual review. This will make sure that their home loan is still serving them and they’re getting the best deal from the lenders.