Managing a mortgage can be perceived as challenging, especially when faced with growing expenses. However, with a clear plan, you can make significant progress towards paying off your home loan sooner. We’ve outlined seven practical tips to help boost your savings.
1. Implement and monitor a budget
Use budgeting tools like Mint, YNAB, or PocketGuard to make it easy to categorise your spending and quickly review your finances. Regular checks can help ensure you’re adhering to your budget and savings goals.
2. Develop a sustainable plan to cut costs
Rather than making extreme changes to your lifestyle and spending habits, focus on manageable adjustments to your spending. Consider cancelling those streaming subscriptions you’re not using, learn how to cook your favourite meals at home, or opt for a second-hand or DIY option rather than buying brand new.
3. Use automatic transfers
Set up automatic transfers for your savings and additional mortgage repayments. This ensures you move your money to where it needs to go before you have a lapse in willpower and spend it. An offset account could also help you to reduce the cost of borrowing by more than you would earn in interest by leaving your savings in the bank. But it could also end up costing you more and limit your access to cash when you need it.
4. Review your loan every couple of years
How long has it been since you looked at the terms of your mortgage? If your circumstances have changed and you suspect you may struggle to make future repayments, we can assist with a comprehensive loan review. We may be able to secure you a payment structure that makes your repayments more manageable and frees up cash flow.
5. Consider additional income sources
Realistically, there is only so much you can save. Another way to boost your savings and make extra repayments is to establish an additional income stream. Think about starting a side job, renting out assets, or selling some of the unused items sitting around the house.
6. Opt for lump sum payments
If you receive a tax return or bonus, think about making an additional mortgage payment. The long-term benefits of additional payments could reduce the life of the loan significantly.
On a typical 25-year principal and interest mortgage, most of your payments during the first five to eight years go towards paying off interest. So anything extra you put in during that time will reduce the amount of interest you pay and shorten the life of your loan.
Make sure to ask your mortgage broker or bank if there’s a fee for making extra repayments.
7. Change your payment frequency
Switching your mortgage repayments from monthly to weekly can offer benefits in the long run. Since interest accumulates daily, this adjustment might lead to savings on your overall home loan.
Need assistance with paying off your home loan sooner?
If you’re looking to kickstart your savings plan and boost your mortgage repayments, reach out to us! We’re here to provide guidance and support. Call us on 03 4418 3444 or schedule and appointment with us!
Proactive Finance Group, your trusted home loan mortgage broker in Bendigo.
