Buying a home is one of the largest transactions and financial commitments we will make throughout our lifetimes, and probably one of the biggest milestones we’ll experience. Although owning a home is something to be proud of, you’re essentially committing to an extensive period of repayments and the longer it takes to repay your mortgage, the more money you are spending in interest.
There is an abundance of ways that you can save on mortgage interest, but it pays to speak to an expert broker to make sure you are taking the right steps to save your money. If you need a reliable and independent mortgage broker, Oak Tree Finances can take care of your every need.
If you’re looking for ways to start saving on mortgage interest, we’ve put together a list of the most helpful tips.
If you’re searching for great home loans Gold Coast and beyond, or you’ve committed to buying a new home, contact us today on 0404 403 066 and we’ll help you get started with finding the best mortgage loan.
A Guide to Saving on Mortgage Interest
Make Extra Payments
One of the best ways to reduce interest charges is by making extra repayments, whether that’s by adding to your existing repayments by a little bit or making lump-sum repayments. This cuts down the mortgage loan term, which means you aren’t being charged for that added interest in the long run.
Use an offset account
The money you have in your offset account is counted each day against your mortgage loan balance which works to reduce the interest that is charged. Effectively this means if you have $50,000 in your offset account then you are not paying interest on $50,000 of your Home Loan.
Make weekly or fortnightly payments instead of monthly
By making your payments on a weekly or fortnightly basis, you are reducing your repayment period and therefore your total interest costs. On a 30 year loan it can save you 4 or 5 years of loan repayments. The main reason you are saving on mortgage interest is that most lenders will require half the monthly amount each fortnight or a quarter each week. This means that over the course of a year you are effectively repaying 13 months worth of repayments. There is a further saving by reducing the loan in quicker intervals but for most people its an effective way to pay extra with minimal impact to the day to day budget.
Refinance to secure better interest rates
Whether you want to switch to a new provider or stay with your current lender, its always good to review your loan regularly to see if you are able to negotiate a better deal. Most reputable mortgage brokers will do this as a free service for their clients and it will save you the time and hastle of doing so. We generally reccomened this is done once per year or whever there are significant changes. This will save you a lot of money on interest charges in the long run.
Choose a shorter repayment term
It may seem more viable to sign up for a longer repayment term, meaning your repayments would be smaller, giving you extra ‘financial freedom’ aside from your repayments. As enticing as this may look, it’s it is more beneficial in the long run to secure a shorter repayment term, as you save a lot of interst repaying your loan on a shorter loan term.
Mortgage health checks
The worst thing you can do for your mortgage is setting and forgetting. It is good to keep an eye on interest rates every so often to make sure you have got the best deal. This can mean looking at different lenders but often it just a case of trying to renegotiate with your existing lender or seeing if they have cheaper products available. It is also worth reviewing your repayments over time as even small increases in your repayments can make a missive difference over time.
If you are looking to speak with an expert about saving on mortgage interest or you are after home loan advice, contact the Oak Tree Finance team today on 0404 403 066 or email us directly at loans@oaktreefinances.com.au and we’ll help you get started!