Get ahead on your mortgage payment
BORROWERS are slowing down the rapid pace at which they are paying down their home loan debt. Many savvy mortgage customers have maximised the opportunity to make serious headway into their debt as lenders offer dozens of interest rate deals with a “3” in front. But latest figures from the big four banks show despite customers having significant buffers in place for when rates do rise, some are not as far ahead as they were a year ago. Commonwealth Bank: In 2017, 76 per cent of customers were ahead of their minimum monthly repayments by an average of 35 months. This fell from 37 months ahead in 2016.
National Australia Bank: In 2017, customers were on average 30.1 months ahead of their repayments compared with 28.7 months in 2016.
ANZ: In 2017, 71 per cent of customers were ahead of their repayments. More than 46 per cent were more than three months ahead compared with 47 per cent in 2016.
Westpac: In 2017, 70 per cent of customers were ahead of their repayments compared with 71 per cent in 2016.
Home Loan Experts’ managing director Otto Dargan urged all borrowers to optimise low rates and pay as much extra as possible.
“The easiest way to do this is to call your lender and ask them to increase the size of your repayments by a few hundred dollars a month,’’ he said.
“Saving just $ 50 a week and paying this on to a $ 500,000 home loan will save around $ 126,000 in interest over the 30- year term.”
He said a good approach is to pay your mortgage the day after being paid to avoid the temptation to dip into the funds and use them elsewhere.
Nick Tsanadis and his wife Marly, both 28, locked in their home loan rate at 4.12 per cent three years ago but when it expires in May they will be looking to switch to a variable deal and pay down more.
“We’re about $ 6000 ahead on our repayments and we have a scheduled payment to pay an extra $ 100 per fortnight,’’ Mr Tsanadis said. “If we can get a cheaper interest rate we will just keep making the same repayments because we can afford it and hopefully that will help take years off the loan.”