Blog: It pays to visit your mortgage regularly
In light of the current low interest rates, it is an ideal time to visit your mortgage to see if you are on the best deal and research the various options available to reduce the home loan. Making additional payments into the mortgage or employing refinancing strategies to increase mortgage payments can help to pay off the loan earlier and own the property sooner. All mortgage holders, especially owner occupied home owners, should revisit their personal finances to ascertain if they are in a position to make additional payments into their home loans. Increasing the repayment amount by just a few dollars will reduce the term of the loan and save on interest paid. There are various ways to achieve this.
- Increasing the frequency of mortgage payments. This is the easiest and the most painless way to make additional payments into a home mortgage. Usually interest on home loans are calculated daily and charged monthly. Therefore, making payments fortnightly instead of monthly can make a difference to the amount of interest paid in the long run. Remembering that there are 52 weeks in the year, paying fortnightly means that you make 26 payments in a full year (as opposed to making 12 monthly payments).
- Paying more than the required minimum. It need not be a whole lot of dollars. For instance, if the fortnightly minimum payment due is $783.00, just rounding it up to $800 can make a sizable dent in the loan. This is because the additional dollars are used to reduce the loan balance.
- Making a lump sum payment into the mortgage. There are many ways that an unexpected windfall can be spent but choosing to put the money into the mortgage can save thousands of dollars in future interest and reduce the term of the loan. An income tax refund, an annual bonus from an employer, extra commissions from sales or an inheritance are lump sum payments that could be used to pay off the home loan sooner. Putting extra money into the home mortgage by using one or a combination of the above repayment strategies will result in reducing the term of the mortgage and interest cost savings. Consulting a mortgage professional,- firstly, to ascertain if you are getting the best deal available and, secondly to explore the various options to reduce the home loan sooner will save you time and money. We’re here to help you.