When hearing about “higher mortgage repayments”, every Australian begins panicking. Even though, at the moment, the rates are overall low, it couldn’t hurt saving more in order to decrease your mortgage repayments, right? For this exact reason, we have come up with five tips that will help you to accomplish that.
1. Discuss with your bank manager
Banks spend significant amounts of cash on a regular basis for advertising, in order to convince more customers to opt for their services. Therefore, it is to their advantage to keep loyal costumers satisfied with their offers. This is something you should use to your advantage by calling the bank manager to talk about your mortgage. Plus, you could consider doing some research on their current offers, and compare them with your repayment options. Ask the bank to provide you with a competitive offer.
2. Consider making mortgage repayments on a weekly basis
There’s no secret that if you make repayments on a weekly basis, you manage to decrease the life of the loan, as well as the interest attached to it. Believe it or not, even the smallest alteration in this direction can make a world of a difference in helping you lower your mortgage. What you may convey as a few dollars, will certainly add up as time passes by.
3. Create an offset account
Another great way of decreasing your mortgage repayments is to open an offset account. Generally speaking, an offset account functions as a regular transactional account that aims at diminishing the amount of interest attached to your home loan. Certainly, one of the main advantages of creating an offset account is that it doesn’t gain compoundable interest. This way, you won’t be required to pay any extra charges for its administration. So, by directing your income directly in this account, you can seriously shorten the lifespan of the loan.
4. Mortgage refinancing
Take the time to compare your current loan with other offers that are available at the present moment. You might stand a good chance of benefiting from better offers than your present one; perhaps another lender is more willing to negotiate a better deal. There are various online calculators that may come in handy in helping you settle whether refinancing your mortgage can contribute to lowering your mortgage repayments.
5. Use your equity
If you already managed to pay off part of your mortgage, you are entitled to have equity. Equity is conveyed as the difference between the present value of the house and the amount of money you owe the lender. Let’s say that your house is valued at $500,000, and you owe $150,000. Thus, your equity is of $350,000, a sum that you can use to re-borrow without being required to go through the run-of-the-mill process of loan approval. The greater majority of lenders would approve to permit the borrower to use his/her equity as collateral. Using your equity wisely can utterly help you to make mortgage repayments sooner.