How to Pay the Mortgage
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A home loan is probably the biggest debt you’ll ever have, so it makes financial sense to try to pay off your mortgage as quickly as you can. By making extra repayments and increasing the amount, you can wipe thousands off your interest bill and years off your loan. It is a good idea to check with your lender first that there are no penalties for making extra repayments. Then, revisit the budget planner to get a clear understanding of your financial situation.
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Guidelines to keep in mind for paying off your mortgage quickly
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| - Pay more frequently: One of the best ways to pay off your mortgage early is to make weekly repayments. So by the end of a year you have paid the equivalent of one extra monthly payment.
- Extra repayments: Remember, every bit helps. By putting a spare $50 a month, or just over $10 a week, onto your mortgage could shave a couple of years off the life of a $200,000 loan and save thousands in interest. For example, why not cut down on the number of coffees you have a day or bring your lunch to work each day? These small savings can make a big difference.
- Keep repayments the same if rates go down: If your interest rates decrease due to a renegotiation or changing economic conditions, keep your repayments at the same level in order to repay your mortgage faster.
- Offset accounts: These work in a similar way to extra repayments. With an offset account, the rate of interest you would normally earn if the money were deposited in a savings account is set off against your mortgage.
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