Steps to pay off your mortgage and become debt free.
To become mortgage free, pay more, more often.
Want to pay off your mortgage early? Then make bigger mortgage repayments, more frequently. You’ll own your own home sooner and save a bundle on interest.
Act now – you pay most interest up front
Most mortgages are structured so that you pay off most of the interest in the early years. If you are serious about wanting to reduce the interest you pay on your Home Loan, you’ll act now.
Get rid of car loans and credit card debt
You’re generally paying a higher interest rate on small loans (e.g. a car) and your credit cards so it makes sense to eliminate those debts first. So, put a rein on your credit card usage and then tackle your mortgage.
Make sure you’re paying off the right mortgage.
When you entered the mortgage market, you might not have been as well informed as you are now. Or the market might not have been as competitive. Stay in close contact with your Mortgage Broker. They can let you know if there is a new home loan product that will save you money over the term of the mortgage.
Flexible mortgages
Most debt-retirement strategies depend on you being able to pay off more of your mortgage sooner. Read the fine print or talk to your MFAA member to see if you have the flexibility you need to reduce your interest charges.
Pay more and pay often.
Assuming you have a mortgage that lets you pay extra, you should pay more and pay often. The interest charged on a $300,000 home loan at a rate of 7.15% over 30 years with monthly repayments is over $ 420,000. By paying off an additional $50 a month, you’ll reduce the interest bill by $39,000 and your loan term by 2 years and 4 months. You could look at making repayments weekly or fortnightly rather than monthly. Over 30 years the savings add up.
