5 ways to pay off your mortgage faster and save

IMAGINE how good it would feel to pay off your home loan — no more worries about rate hikes, just plenty of extra cash.

It can be done, and these five steps explain how to clear your home loan in super-fast time.

Step 1 Check you’re paying a competitive rate

If your home loan lender charges a high rate, you’re behind the eight-ball from the beginning.

With plenty of loans costing below 4 per cent p.a., talk to your Mortgage Choice broker about a home loan health check to be sure your loan is still competitive.

Step 2 Pay a bit extra

One of the quickest (and easiest) ways to pay off your home loan sooner is to pay a little extra off your loan every week, fortnight or month.

Simple habits like rounding up your monthly repayments to the nearest $10, from say $1,490 to $1,500, can be a budget-friendly way to make additional repayments.

Step 3 Pay fortnightly

Consider paying your loan fortnightly instead of monthly.

There are 26 fortnights in a year so paying half your monthly repayment every two weeks instead of once per month means you’ll make the equivalent of an extra month’s repayment annually.

It’s a simple way to get ahead with your loan.

Step 4 Put lump sums to work

Paying occasional lump sums of cash like your tax refund or annual salary bonus into your home loan can make a significant difference to your loan balance — especially if you make it an annual habit.

Step 5 Get smart about spare cash

Got some spare cash?

Why deposit it into a savings account paying 2% p.a. interest when you could use the money to pay down a home loan costing 4% p.a. or more?

Make your money work a lot harder with an offset account that helps you save on loan interest while giving you at-call access to your savings.

Your broker can explain more about the pluses of an offset account and whether it is right for your needs.