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Purchasing a home and ‘owning’ it are two different things. Do you really want to wait for the next 25 years to own your home? On the contrary, you could apply additional lump sum repayments to your mortgage, saving precious bucks and shaving off the years from your home loan.

Making regular additional repayments is a great strategy to reduce your debt quickly. Be it your tax refund, annual bonus or a windfall gain – feed the amount into your home loan to see it disappear much sooner than the scheduled term apart from saving interest.

To calculate your savings, enter the lump sum amount and the year in which you intend to make the payment in this powerful lump sum calculator. Remember, the same amount applied sooner will save you more interest and time on your home loan.

 
Lump Sum Payment tool
 


Own your home sooner

Smart financial planning can go a long way in saving interest as well as reducing the years from your home loan term. By making small, disciplined savings and applying them towards your home loan, you can make a big, positive difference to your wallet.

By simply putting together all your loose change at one place, you could have a sizeable amount at the end of the year to pay towards your home loan. For example, if you only set aside $30 a month, at the end of the year, you will have $360 that could save you $786 and reduce 1 month on a 30-year home loan of $300,000 loan at 4 percent interest rate.

Besides lump sum payments, by making fortnightly repayments instead of paying monthly, you end up making 13 full repayments in a year instead of 12. By doing this throughout the loan term, you can score significant savings that will astound you. Use this extra repayment calculator to see the numbers magically reduce. You could also jumpstart your savings by paying your first repayment earlier than it is scheduled – for example, on the settlement date rather than waiting for a month for the due date.


Score more savings with the right home loan

Everybody knows the importance of choosing a competitive home loan – the lower the rate on your mortgage the more you save on it. But, did you know having additional features in your home loan could save you much more in the long run as compared to a vanilla low-interest rate mortgage?

Choosing the right home loan is the first step towards saving money on it. As mentioned previously, the option to make additional repayments at no extra cost is an important feature to have if you want to reduce your debt faster. Another feature that could boost your savings significantly is an offset account linked to your mortgage. By moving your savings to an offset account, you save on interest every single day as you only pay interest on the outstanding loan amount minus the balance in your offset account. In case you are stuck with a high-interest rate loan or looking to add some of these additional features in your home loan, you could always refinance to one of the competitive broker pre-negotiated deals you can compare here.


Speak to an expert

Buying a house is a long-term financial decision that will impact your finances for years to come. To make an educated choice, use these online calculators to crunch the numbers and avoid mortgage stress in the future.

Speaking to an expert can further boost your savings. Your mortgage broker has adequate experience and access to home loan products from a variety of lenders to suit your individual needs. To find the best possible home loan for your situation, inform your broker what you need in a home loan and don’t. With a clear understanding of your requirements, a broker can recommend best-fit loans for your situation, with all the features you need, at a competitive price. In case you have any queries, our mortgage brokers would be glad to assist you.

 

By Vidhu Bajaj,
HashChing Content Writer

 

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HashChing is helping Australians by providing access to the pre-negotiated home loan deals. Obligation free consultation with one of our partner brokers might save you time, hassle and money.