The decision to transition from ‘tenant’ to ‘first home owner’ can be daunting. Mostly because of the dreaded ‘m’ word: the mountain of debt known as a mortgage. Anyone who’s had a mortgage would say they’d love to have it paid off ASAP, so here are 4 strategies to help sort your finance and become debt-free, fast!
1. Pay it off quickly
There are stacks of strategies when it comes to getting rid of a mortgage, but it all boils down to one thing: pay it off as quickly as possible! Pay your loan off as fast as you can, with higher and more frequent payments. You can save tens of thousands of dollars in the long term.
2. Deposit lump sums in your mortgage account
If you get a lump sum of cash, such as a $2,000 tax return or a work bonus, consider dumping it into your mortgage account. Lump sums can cut years’ worth of interest off the standard loan term.
3. Beat the bank to a rate increase
Get ahead with your mortgage by paying it off at a higher rate of interest than you’re required to by the bank. For example, if your home loan has a rate of 4 percent, pay it off at 5 percent. You’ll save yourself a packet by paying it off early, plus you won’t even feel the financial pressure when the official interest rate does go up.
4. Keep checking in on your mortgage
Sure, you’re locked into the debt, but not necessarily your bank’s finance package. Every so often, look at re-financing, as you may find your current home loan might not be the best fit for you anymore. Always keep an eye out for better offers and consider re-financing with a new lender or your existing one.
Ready to ditch the debt and finally become a first home owner? From finance to handover, with our building partner Easystart Homes, we can make getting into your first home easy.