Making your own coffee can help you save up to $32,000 on your mortgage.
Go without a few little things now and you’ll save big time on your mortgage. Home buyers are potentially throwing away thousands on mortgage interest payments when a few easy tricks can save them big time.
Cutting corners on a few of life’s luxuries, like takeaway coffee, can mean you end up spending up to $32,000 less in home loan repayments. With a little planning you can save plenty in the long run.
And with lenders hungry for market share home buyers now had even more power to negotiate themselves a good deal.
Many buyers fall into a set and forget mentally:
“As soon as their mortgage is set in place and they know what the repayments are they just make them and don’t realise if you get something like a bit tax bonus, or a lump sum of even $500 you can literally strip months of your mortgage.’’
Homebuyers prepared to take a very little pain now could have an awful lot of financial gain in the long run.
Top five tips for saving big time are:
Cut down on treats:
Even small amounts can make a major difference. If you cut out one takeaway coffee a day you could save $20 every working week or about $80 a month.
“If you then put that money into your mortgage, you could potentially shave more than three years off your loan term and save yourself more than $32,000 in interest payable over the life of your loan.’’
If you can’t pay more, pay more often:
We’ve all heard that making regular weekly or fortnightly repayments pays off your loan quicker, but how does that work?
Basically there are 12 calendar months and 26 fortnights in a year. So, if you pay fortnightly, you actually make the equivalent of thirteen monthly repayments per year.
If you can’t pay more, pay more often.
Get a mortgage with an offset account:
With these loans, all of your salary can go into a transaction account that is linked to your mortgage. The money in the account is offset against your loan, this reduces the balance on which your interest is calculated as you only pay interest on the difference between your home loan and your savings.
Use redraws wisely:
A redraw lets you take out any extra payments you’ve tipped into your home loan. It can be a handy feature, but be careful.
It isn’t a golden pot that you can just keep dipping into. Every bit you take out means you reduce your interest by less. Also check if your lender charges a fee for redrawing.
If you keep a check on the health of your mortgage you can save.
Give your home loan an annual health check:
Your circumstances can change dramatically from when you first took out your home loan. Keep across what other lenders are offering so you can make sure your loan continues to suit you.