What are some good tips to help you save money on your mortgage?
1. Confirm your home loan interest rate.
Statistics indicate that almost 1 in 4 people don’t know what their home loan rate is and it could be costing you. So refresh your knowledge and confirm your current rate, associated fees and repayment frequency.
Some people may have originally set up a ‘Fixed Rate’ term of 2 or 3 years and this term has since lapsed. You could get a shock to find that your rate has reverted to a higher ‘Standard Variable Rate’ with no discount applicable.
Check the bank fees applicable – monthly or annual. In some instances, you may not need a product with a ‘Package Fee’. These often attract other retail banking discounts but unless you are utilizing all the benefits ask yourself if this represents good value? Can you move to a basic no frills product with a more attractive rate?
Speak to your Broker or your Bank to discuss if refinancing is right for you.
2. Keep your repayments the same.
If you are able to secure a lower interest rate and if your cashflow can cope, maintain your repayments to the same previous amount. You could make some significant interest savings and pay off your mortgage sooner.
3. Check your repayment frequency.
Making repayments on a weekly or fortnightly basis can also have a positive effect on the interest charged against your facility. As interest is calculated on a daily basis, the more frequently you make your payments, the more you could save. Some also find a fortnightly payment structure to match the payment of their wages, much easier to manage. No-one likes to have ‘more month, than money’!!
4. Increase your payments as your wage increases.
Most of us increase our spending on ‘leisure items’, in line with our salary increases. But with a change in mindset, you could make a significant impact on your home loan by making extra repayments or build up savings in your ‘offset’ facility.
The main thing is…. don’t let apathy get the better of you. Don’t have a ‘set and forget’ attitude with your home loan. Seek help from your Financial Adviser, Mortgage Broker or your Banker and take action NOW!