These can be summarised as follows:
1. Reducing the interest rate you pay
2. Reduce the fees you pay
3. Make extra repayments
4. Use your offset or redraw facility effectively
To illustrate the power of the above options we will use an example based on a home loan of $250,000 over 25 years.
By reducing your interest rate you can save thousands over the life of your loan. If you are paying a standard variable rate this unacceptable. Consider the following?
Reduce the rate you pay by 0.5% from 8.07% to 7.57% and you save $82 per month (repayments reduce from $1,941 to $1,859 per month). This saves you $984 per annum or $24,600 over the life of a $25 year loan.
You can see the power of interest rate savings first hand by contacting What If We Finance or using our interest saving calculator.
You can save thousands by finding a loan with no upfront fees or no ongoing fees. No upfront fees saves you around $600 (based on a typical application fee) and a $10 monthly charge saves you around $2500 in fees around the life of the loan.
If you are paying fees contact What If We Finance to see how you can save potentially thousands.
Making extra repayments can be one of the most powerful tools when it comes to saving interest and costs. What If We Finance provides the following simple examples to help you understand how you can benefit:
You can save up to $40,907 by making extra repayments of $82 a month and reducing you interest rate by 0.50% pa.
You can save $5,769 by making extra repayments of $10 a month from the money saved by not paying a $10 monthly ongoing fees.
You can save $54,003 by splitting your monthly payment in two and pay every fortnight. This equates to paying an extra $136 per month!
What If We Finance has always recommended that you deposit all your savings and income into your home loan account and use an offset account and or redraw facility to use funds for future purchases. When choosing a loan, make sure that fees are not charged when using either of these facilities.
An average balance of $10,000 in an offset or in your loan account over the term of your loan and you can save $49,715 in interest payments or reduce the term of your loan by a further 2 years and 3 months
As you can see there are a number of different options you can use to reduce your home loan or mortgage and pay it off sooner. Your Melbourne Mortgage Broker What If we Finance with a brief consultation can show you how you can pay off your mortgage sooner.
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Leading Melbourne Mortgage Broker What If We Finance is a boutique mortgage broker speacilzing in helping your see the possibilities. We strongly believe not all mortgage brokers are created equal. Come and see why...