Pay off your home loan or take that holiday you’ve always dreamed of? It’s kind of like deciding between replacing your stormwater and sewerage pipes or buying a spa pool… long-term gain vs instant gratification.
Paying your home loan off earlier than its full term will save you tens, even hundreds of thousands of dollars on the cost of your mortgage and take years off the term of your home loan. If you’re committed to it, you’ll be mortgage-free in no time!
It’s not easy but well worth it in the long run if you follow some of these golden principles:
- Make extra repayments, especially early in your loan term. Got a tax refund? A cash bonus from your boss or a windfall from your recently-departed rich grannie? Stick it straight on your mortgage and reap the rewards later on.
- By making your loan repayments fortnightly rather than monthly you’ll make two extra repayments a year.
- Find a cheaper home loan but don’t change the amount you’re repaying. Keep your repayments up if interest rates drop to stay ahead of your repayments.
- Spend less on other things in life and more on your home loan repayments.
- Shop around for the best home loan deal. The first one you see might not be the best.
- Consider putting a portion of your mortgage onto a revolving credit home loan, and focus on paying that off first. Your income will be paid into your revolving credit account and cut down the amount of principal that interest is calculated on. Then do it again with another chunk of your remaining home loan.
This information is not intended as a complete guide, as it doesn’t consider your individual needs or financial situation. Trade Me accepts no responsibility or liability for any inaccuracies or omissions in the content. Always obtain independent legal advice before buying or selling property.