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Five tips to pay off your home loan sooner

Sometimes it can feel like your home loan is taking over your life. Depending upon your situation, it can keep you up at night, stress you out during the day and stop you from enjoying day-to-day life. We’re always looking for quick fixes during life’s tough spots, so we’ve created a short list with five tips that’ll help you pay off your home loan sooner.

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Align payments with your salary

This is possibly the sneakiest way to get your home loan paid off faster and will work well if you already have an offset account. By shifting your payments to align with your salary, you’ll be able to make more frequent repayments, depending on how often you receive your salary, potentially cutting down the length of your loan.

For example, let’s say you’re currently paying $2,000 a month on your home loan and that you receive a salary fortnightly, adding up to $24,000 a year. If you decide to switch your repayments to fortnightly, like your salary, you’ll be repaying $1,000 every fortnight. You’ll now be looking at 26 repayments in the year, or $26,000. By using this method, you’ll be shaving off an extra $2,000 on your home loan each year.

Need help creating a budget and planning your finances? Have a look at our 7 hacks to keep to keep your financial planning on track.

Make faster payments/ frequent payments

Our next tip may appear scary but it can save you a lot of time and money. If you’re feeling like your home loan will never vanish, simply switch up the duration of the loan and shorten it, which will evidently force you to make faster and more frequent payments. Obviously, this is a tip that cannot aid everyone, as everyone’s financial situation varies, but, by paying off your loan as fast as you can, you’ll have more money in the bank long-term.

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Use your equity

Our next tip is for someone who’s been in the repayment world for a while and now has equity. If you weren’t aware of this, equity is the difference between the current value of your home and the amount you have left owing on your loan. You can actually re-borrow this money and use it as collateral, without having to move through the process of being approved through your already existing loan.

Use all the resources available to you

woman-distributing-family-budget One of the many advantages with today’s home loans is the variety of options and the level of flexibility. These days, there are number of ‘bonus features’ attached to home loans that are up for grabs. Like we mentioned before, having an offset account is a great option to lean on when it comes to paying off your home loan faster, especially if you own a 100 percent offset account. Every single dollar that sits in that account can be used to make your repayments faster, reducing the amount of interest you pay. Take advantage of this.

You also have the option to access the redraw feature. This involves redrawing money from your home loan if, by chance, you’ve made additional repayments. This will give you peace of mind as you won’t have to stress about not having access to that money on a rainy day.

Make sure your home loan still works for you

This is something to think about every now and again: what worked for you then may not work for you now. Times change, so it’s best to keep up to date with the latest in terms of the market and what it has to offer. It could mean new products, rates and minor changes that could be the difference between you paying off your home loan faster or remaining in the same position.

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Tags: first home buyer, property, home loan, home loan calculator, refinance

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Important legal stuff

COMPARISON RATE WARNING: This comparison rate is true only for the example given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. The comparison rates are based on a loan amount of $150,000 over a loan term of 25 years.
Lendi is the trading name of Lendi Pty Ltd, a related body corporate of your licensed credit assistance provider, Auscred Services Pty Ltd (ACN 164 638 171, Australian Credit Licence Number 442372). We will never sell your email address to any third party or send you nasty spam, promise.
EXAMPLE: This example is current as at 20th October 2016. A Click Loans Online Principal and Interest Loan of $150,000 over 25 years has monthly repayments of $767. This is calculated based on the interest rate of 3.69%, comparison rate of 3.69%, upfront fees of $0 and annual fees of $0.
IMPORTANT INFORMATION: Loan terms of between 1 Year and 40 Years are available subject to lender and credit criteria. Maximum comparison rate will not exceed 14.99% (see comparison rate warning above). Any calculations or estimated savings do not constitute an offer of credit or a credit quote and are only an estimate of what you may be able to achieve based on the accuracy of the information provided. It doesn't take into account any product features or any applicable fees. Our lending criteria and the basis upon which we assess what you can afford may change at any time without notice. Savings shown are based on user inputted data and a loan term of 30 years. All applications for credit are subject to lender credit approval criteria.
Lendi is a privately owned and operated Aussie business. Our mission is to provide Aussies with the right experience when choosing a home loan from our panel of major and non-bank lenders including Click Loans which is a wholly owned subsidiary of Auscred Pty Ltd and a related body corporate of Auscred Services, your credit assistance provider. Although Lendi compares over 1600 products from over 30 lenders, we don't cover the whole market or compare all features and there may be other features or options available to you. While Lendi is 40% owned by founders and employees, we have also been supported by some great minority shareholders including Bailador, Macquarie Bank Ltd and a number of Australian sophisticated investors. We have an independent and founder led board.
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