Get Rid of Debt – 10 Ways to Pay Down Your Home Loan Mortgage SoonerMay 9, 2023
1. Make Additional Repayments To Your Loan
It is amazing how much an extra per week can make to your home loan over the long term. If you are determined to cut down your spending, and start to watch your money more carefully, this can be quite easy to achieve. Having a budget can help you find this extra money. It is amazing how a small amount of money can make a large difference to your long term financial future.
2. Make More Regular Repayments To Your Loan
The interest cost on your Home loan India is more than likely calculated daily, so if you can make more regular repayments you can pay more off the loan sooner and reduce your interest costs.
The easiest way to do this is set up your loan repayments to match when you receive your wages / income. I.e. if you get paid on a fortnightly basis you may wish to pay the fortnightly portion in that pay rather than waiting to pay it on the day of the month, when your repayments fall due.
3. Look At Other Loan Options
There may be cheaper interest rates or lower fee loans on the market that you may be considering. This means that if you can get a cheaper interest rate and continue to pay the same amount in repayments that you are currently paying, you will pay more off the principal component of the loan, clear the loan sooner and save yourself interest.
If considering changing financial institutions to get a better loan deal, be careful. Explore this option carefully as there may be refinancing costs involved.
Speak to your own bank about your loans including your fees and interest costs. You never know, you may be able to get a better deal through your existing financial institution if you ask.
4. Save Via A 100% Offset Savings Account
Consider putting savings in an offset account attached to your loan. If you have any money sitting around in different accounts consider consolidating them and putting all proceeds into a 100% offset savings account.
The interest charged on your home loan is calculated on the difference between the home loan balance less the balance in your savings account. This works the same way as if you had paid the money directly into your home loan but instead the money is kept available to you in your savings account.
5. Pay Any Spare Income Into Your Home Loan
Use monies such as your tax refund or bonus payments to drive down your loan. If these monies haven’t been allocated elsewhere, you can make a large dint in your home loan by paying off lump sums. You may like to set aside some of your bonus to reward yourself for a job well done, but try to allocate a portion of these amounts to your home loan to drive this debt down. You can always reward yourself later when you are living in your home debt free (some food for thought!).
6. Hit The Principal Early
When you initially get your home loan, you may be in a good position to drive down the debt before you get married, have children or go overseas etc.
At the beginning of a home loan you will generally be paying a higher proportion in interest costs as the debt will be higher. As you pay down the loan, more of your repayments are reducing the principal amount. Therefore if you can pay more into the loan initially, reducing the principal amount, you can reduce your home loan sooner.
7. Pay Your First Home Loan Payment As Soon As You Settle
Why not get ahead on your loan as soon as you start off. A good trick is making a payment on the day the loan settles. This way you are always one payment ahead and are saving a bit of interest from day one.
8. Don’t Lower Your Repayment
If your minimum home loan repayment drops because of a fall in interest rates, don’t lower your repayments. By continuing to pay your normal repayments you will be able to reduce the balance of your loan a lot sooner.