Mel Finance

Can a Home Loan be paid off early?

Can A Home Loan Be Paid Off Early
Share This Post

Reducing the life of your loan isn’t difficult; there are many simple things you can do to cut years off your mortgage. Here are some tips that will help you be mortgage-free sooner than planned.

Small extra repayments

One of the most obvious ways to pay off your home loan quicker is to make extra repayments. Depositing lump sums, such as a tax return or work bonus, will always be beneficial, however, it doesn’t always take large amounts or windfalls to make a substantial difference.  Planning for regular, small cash injections can have a great impact over the life of a loan.

As an example, lets say we give an extra $50 a fortnight on a $500,000 loan, that saves you $32,000 of interest over the life of the loan which in turn will save you just over two years. That’s only $25 a week.

Switch your payment intervals

If you find that you don’t have the discipline to make extra repayments, then simply switching your payment structure can also help save years off your mortgage, as well as simplifying your finances if you are paid fortnightly.

There are 12 months in a year but 13 four-week cycles, by switching your payment intervals from monthly to fortnightly, you are essentially paying off an extra month per year.

Make sure you have the right type of loan

Ensuring your loan allows extra repayments without penalty will let you to make the most of bonuses or funnel small extra payments to reduce the loan principle more quickly, saving on interest immediately, while an offset account will use your savings or living expenses to reduce your principle, while still allowing you to access these funds from a transaction account.

Although you may have to pay extra fees for the offset or redraw account, these may well be lower amounts than the interest saved. Talking to a finance broker is the easiest way to work out whether this option is financially sound. Here at Mel Finance Services we offer 200+ products from over 30 lenders and we are becoming a competitive Mortgage Broker Melbourne. Our aim is to find you a best possible product for your situation just not one generic product.

Contact Us Today

Paying off your home loan faster isn’t difficult, however, it does require financial discipline and expertise in ensuring the right loan features are in place. Call us today for a free no-obligation appointment to find out whether you have the right home loan product.

Related Link:

Home Loans: Your Important Questioned Answered

 

Lumbini Wekunagoda

Lumbini Wekunagoda

Lumbini marries practical insights with solid financial knowledge to craft tailored solutions. Lumbini has a diploma in Mortgage Broking, a Certificate IV, a supplementary Diploma in Mortgage Broking and Finance, and an MBA from the prestigious University of Wales. As an ASIC registered , licensed Mortgage Broker (CRN:444210), Lumbini upholds the highest standards of professionalism and ethics, aligning his practice with the Mortgage and Finance Association of Australia (MFAA).

More To Explore

Refinance My Home Loan

Why Refinance Your Home Loan?

The onset of 2023 brings a forecast of continued interest rate increases, spotlighting the importance of examining your finances to identify potential savings. One area

Read More »
Refinancing Your Home Loan

Refinancing home loan

Tips for Successfully Refinancing Your Home Loan Unlock the secrets to secure mortgage refinancing approval, even in a climate of rising interest rates. As interest

Read More »
Mortgage Options Cashback Interest Rates

Navigating Mortgage Options

Navigating Mortgage Options: Cashback, Interest Rates and More! In the world of home loans and mortgages, there’s a lot more to consider than just the

Read More »
How to Avoid Refinancing Traps

How to Avoid Refinancing Traps

With the current state of the real estate market and interest rates, many homeowners are considering refinancing their properties. Refinancing— the process of replacing an

Read More »
MelFinance

Schedule A No-Obligation Call

With Melbourne's Premier Mortgage Broker







    Melfinance MFAA 2023
    MelFinance Elite Broker 2023
    Melfinance MFAA 2021
    Free Consultation 1800 941 947