Getting rid of your mortgage is like getting rid of clutter in your home. You stare it down everyday wanting it to just disappear with a snap of your fingers but it’s not that easy. It may take you a while but when you get a clutter-free home, it’s like releasing a sigh of relief.  Well, reducing your home loan can be a tedious effort but once you begin the process, your financial situation will improve – likened to a sigh of relief.

Let’s examine 4 main ways to reduce the cost of your home loan:

1. Get a lower interest rate and only pay for necessary features
2. Consistently make extra payments
3. Pay weekly rather than monthly
4. Make payments above the required amount as often as possible

Lower and cheaper interest rates with the flexibility to make extra payments that accommodate your lifestyle is the greatest ONLY opportunity to getting rid of your mortgage. Lower and cheaper interest rate loans might have slightly higher price.  However, only get features you need because they do cost more money.

Also, if you pay more frequently, you get interest savings where interest is calculated daily because you are reducing the loan balance on a regular basis.  Debt consolidation is a good way to obtain a lower and cheaper rate.  Refinancing is another course of action that could allow you to access cheaper and lower interest rates and better products.  In order to refinance, there must be enough equity available in your property. You should have good credit history. Calculate the sums to determine if it’s worth refinancing.

Tip: Some lenders will allow you to pay extra within a fixed limit and at least one lender will allow you to pay extra.

With every dollar put against your loan early will reduce the principal which will eventually result in less interest payments.

Tip: A Line of Credit is not necessarily the best way to pay your mortgage faster. In fact, Lines of Credit are like a very big credit card; the worst case scenario is that they can run at their maximum limit.

Communicating periodically with your mortgage broker keeps you up-to-date with changes in the home loan market.  Notify your mortgage broker with any changes in your personal finances.  If a new product is offered, it may benefit your financial status in helping reduce your home loan.

If you’re ready to speak to someone in the know, call Excellence Finance today at 9609 4655.