Three ways to help pay off your home loan sooner

At the end of the day, when it comes to your home loan, we all want to pay it off sooner rather than later. By identifying ways to pay down your home loan debt faster using tools such as a home loan calculator, repayments can be slashed fast, helping you achieve that goal.

Using tried and tested methods such as making additional repayments, lump sum repayments and by using mortgage offset accounts, along with RateCity’s home loan calculator, repayments can be brought under control promptly.

Additional repayments

You’ll see that when using RateCity’s home loan calculator, repayments don’t have to be a burden. One way to save on interest with a home loan is by making extra repayments. It sounds really simple, but by making additional repayments into a home loan, you’ll be surprised how quickly you’ll start eating into the loan principal, while also trimming back the term of the home loan.

One way to make extra, regular repayments is to ask your employer to pay some of your salary direct into your home loan. Just be sure to check with them that this is possible.

Lump sum payments

Paying a lump sum of cash directly into the loan, such as an annual tax refund, a lottery win or a salary bonus can also cut the amount of interest you’ll pay over the life of the loan. However, ensure that your lender offers a redraw facility, which will allow you access to this money in an emergency.

Mortgage offset accounts

In the highly unlikely situation that a lender doesn’t offer a redraw facility, they might offer a mortgage offset account instead.

An offset account is like a transaction account that can be generally linked to a variable rate mortgage. This enables the money in your transaction account to be offset against the balance of your home loan, so you only pay interest on the balance. For instance, if you have an outstanding balance on your mortgage of $300,000 and your offset account has $30,000, you’ll only pay interest on $270,000 ($300,000 – $30,000).

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