How to Get the Most Out of Your Home Loan

Your home loan is probably the biggest and longest lived debt that you will ever owe.  With most mortgage terms lasting between 20 and 30 years, it’s important to make sure that you’re managing your home loan debt as effectively as possible.

Here are a few tips to help you keep on top of your mortgage, and make sure you’re getting the most out of it.

Make Larger Payments

Wherever possible, try to pay off more than what you’re required to.  Add a little extra on to each repayment and you’ll be on your way to paying off your mortgage quicker and reducing your overall interest, bit by bit.  It’s also a great idea to make larger lump sum payments whenever you can afford it.  This will also leave you with a safety buffer in case you find yourself in a rough patch and unable to make a complete payment down the track.

Pay More Often

A simple alternative to get ahead on your loan if you can’t afford to pay extra on each payment is to pay weekly or fortnightly instead of monthly.  This means you’re actually paying a little more over the year than you would on a monthly payment.  Given that each year has 26 fortnights, paying once every two weeks rather than once a month will actually mean you are ahead on your payments by a month at the end of the year.

Use an Offset Account

Using a mortgage offset account means your income and savings are kept in a bank account that is attached to your mortgage.  The mortgage is then considered to be reduced by the amount in that account, meaning that interest is calculated on the remaining amount owed minus the dollar value in your offset account.  This can save you hundreds a year in interest, while the money in the account still belongs to you and is still accessible for everyday use.

Be on the Lookout For Better Deals

Home loan rates are always changing and the industry is in a constant state of flux.  This means that, while you make have snapped up the best deal at the time you took out your mortgage, it may not be the best deal 5 years down the track.  Make sure you’re always keeping an eye open for better deals and don’t be afraid to refinance when the time is right.

Before considering this, make sure you’re eligible and that any exit fees won’t outweigh the benefit of refinancing.

Consolidate All Your Debts

If you’ve got a few other personal debts you’re paying off, like loans or credit cards, then you should consider taking out a loan for debt.  This means you can combine all your repayments in with your mortgage, which will mean you can take advantage of the lower interest rates offered on a home loan – usually much lower than the interest on a credit card or personal loan.  It will also mean that you no longer have many different repayments due at different times throughout each month, leaving you with one easy repayment.

Investigate your options with a reputable debt consolidation company like Fox Symes, who are Australia’s largest debt consolidation provider and can walk you through the process.

Your home loan doesn’t need to be a burden, there are lots of easy ways to stay ahead and make sure you’re utilizing it to its full potential.  Never be afraid to ask a professional and get help with budgeting, refinancing and debt consolidation to help you take control of your finances.

Tara is a business and personal finance writer from Brisbane, Australia. She has recently been shopping around for a new home loan and provides these tips to help others in the same position.

This article is a guest post.  If you would like to write for Money Soldiers, you may visit the Write for Us menu for details.

 How to Get the Most Out of Your Home Loan

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Comments

  1. Memorable Post !!!!! I think this article suggest a proper way to reduce debt and invest smartly. I will definitely do the same as mentioned in the article to pay my house debt.

  2. I really enjoy reading your blog and its amazing for my need. I find your suggestions very useful, i’m sure many people come to like your blog and gain benefit from it. Thanks for sharing.

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