When it comes to your home loan, making small changes can add up to big savings. Additional repayments and changing the repayment frequency can have a dramatic affect on how long it will take you to repay your home loan and how much interest you will pay.
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The interest on home loans is calculated daily, so the sooner you can make a payment or the more you pay, the less interest you will be charged. If you maintain the regularity of the repayments you can wipe years off the time it will take you to repay the loan and also save thousands in the process.
Making additional repayments may sound difficult, but you might be surprised how much of an impact a small change can make.
Making small sacrifices can equal big savings.
To help put this into perspective, if you currently buy a takeaway coffee each workday for $4 each, by simply foregoing your bought coffee and putting that extra $40 a fortnight into your home loan you could save a significant amount of time and money.
On a home loan of $350,000 over 30 years at a rate of 4.5%, the extra payment would save you almost two and a half years off the term of the loan and $26,337 in interest.
Even if you can only make small additional payments - it WILL help. So next time you have a little extra cash (or perhaps when you get your tax refund) consider paying some extra off your home loan.
Try our Extra Repayments Calculator to see how much you could save.
Loan repayments are generally made on a monthly basis but you may have the also have the option of paying either, fortnightly or even weekly in some cases.
By choosing fortnightly repayments you'll pay half of your monthly repayment amount each fortnight. Since there are 26 fortnights every year, this is equivalent to making an extra month's payment each year.
On a home loan of $350,000 over 30 years at a rate of 4.5%, paying half the monthly amount fortnightly would save you almost five and a half years off the term of the loan and a whopping $49,058 in interest.
Try our Fortnightly Repayment Calculator to see how much you could save.
To learn more about ways to save on your home loan, speak with a Bernie Lewis Mortgage Adviser on 8300 8300 today.
The information provided in this article is general in nature and does not take into account your personal circumstances. Since everyone's personal situation is different, this article should not be taken as advice.