Are you feeling depressed about how long it will take to pay off your home loan? Don’t fret a lot of people feel the exact same way.
But what if there were some simple changes you could implement and take years off your loan and save a lot of money? Of course you should be excited about that! Let’s take a look at few easy strategies you can start using right now.
So say you have a home loan of $360,000. You make the minimum repayments and expects to do so over the next 30 years at a historically reasonable interest rate of five percent.
What you might not know is that over the next 30 years you will accumulate $340,000 in interest charges. Now, intuitively you might understand that if you were able to pay your loan off in 20 years instead of 30, then those interest charges will be lower.
But you may not realize that it could be in the region of $150,000 in savings! So would you like to pay your loan off quicker? Of course you would!
Here are three easy strategies that you can follow to pay off your house faster and save a considerable amount of money.
I think you’ll be amazed. These tried-and-true strategies have been saving mortgage holders a lot of cash for years.
So here we go. You take your monthly home loan repayments, let’s say $2,000, and you cut that in half ($1,000). You then make that payment every two weeks (fortnight).
Now as you’ll be aware there are 26 fortnights in a year but only 12 months. So if you paid off $2,000 every month that would be $24,000 contributed to your home loan, whereas if you pay off $1,000 every fortnight that’s $26,000 contributed to your home loan.
This strategy allows you to pay your home loan off nearly six years sooner, and save yourself almost $75,000!
By rounding up your loan repayments, even a small amount, you can make a significant dent in your home loan interest charges.
Say your home loan repayments are $1,951 per month. If you round it up to $2,000, you’ll pay your home loan off nearly 18 months sooner, and save yourself $20,000 in interest!
Refinancing can save you a bundle. Here’s what you can do – call your lender and ask them if your rate is as low as it could be. There is a good chance you are qualified for a lower rate.
If you change your home loan from a rate of 5% to one with a rate of 4%, you’ll reduce your home loan by three years and save nearly $75,000! Yes, refinancing can be a hassle, but it seriously pays.
These simple strategies to pay off your mortgage sooner are easy to do and will save you a lot of money. Give them a try!