Four Steps to Slash Your Mortgage

Here we have sets out surefire, stress-saving ways to reduce the financial impact of paying off a mortgage.

In brief

Here are the four simple steps that will see you home-loan-free years sooner:

1. Understand how your mortgages work

The important element to understand about home loans is that interest is calculated on the daily rest and charged to the loan account monthly in arrears. Take advantage of this fact. If you can reduce the daily balance, even by just a few dollars, you will save in the long run on both interest paid and the tenure of your loan.

2. You set the repayments

Lenders may call all the shots when it comes to setting your home loan repayments, but you don’t have to stick to them. Plan your repayment as much as you can afford, inform the lenders about your extra prepayment, else they will assume it as advance payment and save no interest from you mortgage.

3. Pick the right home loan

You can employ all the mortgage-reducing strategies in the world, but if you don’t have the right home loan you could find yourself stuck with a few extra years and extra interest. The cheapest home loan may not necessarily be the best home loan, but it is a good starting point.

4. Apply the basic principles

The final step to paying off your home loan sooner is to apply some mortgage-reducing principles. Chances are you’ve already worked out one or more of these tips, but it never hurts to pick up another strategy. For example, you may realized that fortnightly payments are better than monthly, but are you better off paying weekly rather than fortnightly?

With these 4 simple steps take place and stick to them, you will save up to few years of your home loan servicing period and interest paid as well.