Mind blowing easy ways toreduce your mortgage

Publication of Trusted Mortgage Broker

Mind blowing easy ways to reduce yourmortgage

Refinance to a lower interest rate

Despite rock-bottom rates, many creditworthy Australians have not yetrefinanced. And that’s a shame: Borrowers who refinance can lower their rateby as much as 1% and save substantially. For a $500,000 home loan, thatcould translate to savings of about $89,234 in interest payments over 30years, which means an extra $2,974 in your pocket each year. To calculatehow much you could save, use our Complete Loan Comparison Calculator.

If you plan on staying in your home for at least three more years and yourmortgage is at least $300,000, with an interest rate of 4.50 percent orhigher, then you seriously need to consider refinancing. The key is to find anexperienced mortgage broker who will do all the research and hard work foryou. They are privy to many special deals that are not available to the bankbranches. Some of the specials the banks offer is up to $1,500 cash back forrefinancing customers. If you can reduce your current interest rate, go aheadand refinance.

When researching for an experienced mortgage broker, make sure they are amember of the Finance Brokers Association of Australia and that they havetheir appropriate qualifications to give credit advice. All mortgage brokersmust give you a credit guide and privacy policy which states their AustralianCredit Licence number and credit representative number.

Mind blowing easy ways to reduce your mortgage

Mind blowing easy ways to reduce yourmortgage

Refinance to shorten your loan’s time frame

It’s becoming increasingly popular for home owners, even those on tightbudgets to refinance their 30 year mortgages to 20 or even 15 year ones.Today’s low rates allow you to do this while keeping your monthly paymentfairly close to the current amount. Say you’ve been making payments on a 30year at 5.5 percent interest rate mortgage of $500,000. If you refinance to a20 year at 4 percent for example, your payments will increase by less than$200 a month. Yet you would pay off the loan 10 years earlier, build equityfaster, and save an astonishing $294,844 in interest!

Make a lump-sum payment

Did you receive a tax refund? An inheritance? Or come across a small stash ofcash? Consider applying some or all of this money to your mortgage. This isone of the best strategies you can employ, because you’re not required tomake a higher monthly payment and you didn’t count on having the money inthe first place, so you won’t miss it. Making a single $5,000 payment on, say,a 30-year 4 percent interest rate mortgage of $400,000 at the 5 year markwould save a home owner more than $8,432 in interest and reduce therepayment term by 7 months.

Take note: Make sure you do not pay this into a fixed rate mortgage as thelender could charge you a penalty for extra repayments. This is when youneed an experienced mortgage broker to structure your mortgagesaccordingly. Ask the broker if there is a lender who has a 100% offsetaccount linked to the fixed loan – in this way you never have to pay a penaltyfor any extra repayments. Get more info on this topic here.

Mind blowing easy ways to reduce your mortgage

Mind blowing easy ways to reduce yourmortgage

Switch to bi-weekly payments

Simply by making half your monthly payment every two weeks, you will chopoff almost six years off a 30-year mortgage.

Not to mention that you’ll save tens of thousands of dollars over the life ofthe loan. All you have to do is contact your lender to change your paymentschedule (be prepared you to pay a fee depending on what type of mortgageyou have). Remember that twice a year, you’ll be making three payments amonth instead of two, so be sure that there are enough funds in your bankaccount.

Round up your payment

Every little bit—even if it’s just $20 or $50 a month—that you pay towardyour principal is less that you’ll ultimately pay in interest. For instance,maybe you have a monthly mortgage payment of $954.83. If you round upthe payment to $1,000 by putting in an extra $45.17, you’ll pay off your debttwo years and five months early. Use our extra repayment calculator tocalculate your savings. This is a great option for anybody with a littleadditional cash, especially someone who has already refinanced or whodoesn’t qualify for refinancing.

Mind blowing easy ways to reduce your mortgage

Mind blowing easy ways to reduce yourmortgage

About the Author

Sue HayterSue's service commitment is fantastic. At Trusted Mortgage Broker we work with our clients to ensure they understand their options, know exactly how much they can borrow and ensure they choose the right home loan and the right lender that is not unsuitable to their individual needs.Australian Credit Licence 490770

Mind blowing easy ways to reduce your mortgage