8 Tips to pay off your home loan faster

Your home could be the cornerstone of your financial future

Not only can you live in it, you are likely to get capital appreciation over time. By paying your home off faster not only could you save a great deal in interest but you could set yourself up to be able to use the equity in your home to fund future business or investment opportunities.

Remember, the best loan is the one you pay off the fastest and with the least amount of interest paid. Here are some suggestions to help you:

 

1. Set a budget and stick to it

Understand what your living costs are by preparing a simple budget and stick to it so that you can save for the things that are important to you, such as paying down your home loan, going on a holiday or buying an investment property.

2. Make your repayments every fortnight

As interest is calculated daily, making fortnightly payments means you are not letting the interest accumulate for a full month before paying it. This strategy can take years off your home loan!

3. Use your salary smartly

It may be in your interests to pay your salary directly into your home loan account and redraw your living costs as and when you need them. Your principal and interest gets paid before anything else and your savings can actively reduce your home loan.

4. Make extra lump sum payments when possible

Try to contribute your tax returns, cash gifts, inheritances, bonuses or any extra money you can to your home loan. You’ll be surprised at the difference such contributions can make.

5. Paying a little bit extra

Chances are your income will increase over the course of your home loan. When this happens, allocate a percentage of your increase to your loan repayment. Again, this will save you a great deal in interest over time.

6. Carefully manage your short-term debt

The interest you pay on your credit and store cards is much higher than the interest you pay on your home loan. If you have to use a credit card, look for one that gives you an interest free period and make sure you pay it in full every month.

7. Get rid of your expensive debt as quickly as possible

If you have debt accumulated in credit cards, you can use the equity on your home to drastically reduce your credit or store card interest costs. If your credit card debt is getting you down and you don’t know how to tackle the growing debt, as us about the Aurora Money Mentoring program.

8. Regularly review your loan with Aurora Finance Group

As your circumstances change, it’s important to review your loan to ensure it still meets your needs.