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How to Pay Your Mortgage Off Faster
With home loan interest rates as low as sub-2%, now is a great time to think about restructuring your loan and paying down debt more quickly.
If you own rental properties, you might be carrying a lot of debt, but the first mortgage to pay off is the one on your family home.
There’s only one essential way to pay off your home loan faster, and that’s to make higher repayments. But you can be quite sneaky about the way you do it, so it’s not painful to part with the extra money. Here are three methods:
- Refix but keep your repayments. For instance, if your loan is $500,000 for 20 years and you switch from 4% interest to 2.5% interest but maintain your repayments, you’ll be on track to knock over 3 years off your mortgage and save around $22,500 in interest.
- Roundup. The payments on the loan above at 2.5% are $2650 a month. Round it up to $2700 and you’ll save 5 months and nearly $3,500 in interest. It’s not much, but it all adds up.
- Offset your savings. Hopefully, you have some savings for a rainy day, or to pay tax from your business. Use those savings by offsetting them against your home loan to save interest costs and pay off your loan more quickly. The numbers are a little tricky but you can find out more here.
It’s a great feeling to reduce your debt and build your wealth, so try to take advantage of these low-interest rates to get ahead.