Repay your home loan in no time
Expert tips on how you can repay your home loan faster while saving money.
A mortgage loan is probably the single, biggest loan and the loan that you will be paying for the longest. It is also important to note that this type of loan comes with the most fees and expenses. You need to be able to pay for bond and transfer fees and registration upfront. Make sure that you have saved for this before purchasing your home. If at all possible you should have a large deposit when you buy your home. This will help you save on the initial loan amount. There are also municipal fees and insurances that will form part of your monthly payments.
Make extra repayments
You can ask your lender for the account number of your home loan and you can pay any extra monies that you may have directly into the account.
If your home loan is with your bank then it can be linked to your current account and you will be able to transfer monies directly into the account.
Consider paying any extra money into your home loan. Yearly bonuses or very good months of commission can help you make an extra repayment.
Make additional repayments from the start
When you do your budget, to make sure that you have enough available to repay your home loan, put in a little extra. This will mean that you can make an extra repayment from the start of your mortgage. Even if it is only a small amount it will make a dent in your loan.
Making repayments from the start can drastically change the time you spend repaying your home loan. Remember, the idea is to lower the principal amount, which allows you to lower the amount of interest that accumulates.
Find a cheaper interest rate
Always shop around for cheaper interest rates. Should you find a cheaper interest rate, it will once more allow you to save on the principal amount of your loan. With the number of home loan lenders available, there are always cheaper rates out there.
When you first apply for your home loan you should apply to a few different lenders. You can then compare their interest rates and choose the best one to save.
You do not have to stay with your original choice for the full term of your home loan. You can move your home loan to a different provider should you find a better deal during your loan term. There may however be some fees involved so be sure to consider all the options.
Cover the additional fees
The actual loan amount is not the only fee that will make up the principal debt of the loan. It is advisable that you pay all other fees upfront to avoid having to increase the principal amount, which will, as a result, increase the interest charged to your loan.
Always negotiate
There are so many home loan lenders available today.
As a homeowner, you should always be looking at improving your current home loan repayment plan. One such way is to always negotiate the best fees and interest rates on your home loan. This should be done throughout the duration of your home loan repayment. Be on the lookout for better payment plans, interest and additional benefits like loans that include mandatory insurance.
Redirect funds to your Home loan
Throughout the time that you spend repaying your home loan, you will receive additional funds. Whether it be yearly bonuses, returns from investments or such, redirecting these funds to your home loan can help you save a lot in the long run.
Another great tip is to use your bond account as a savings account. You are still able to withdraw the additional funds but you are sustaining a lower principal amount and therefore saving on interest.
Make a falling interest rate work for you
If you do not have a fixed interest rate, you could take advantage of a falling interest rate. This would mean that the scheduled repayment amount might decrease; it is at this point that you should capitalise on a lower interest rate and redirect the saving on your repayment back into your home loan. It is a very efficient way of saving money when repaying your home loan. Simply request that your lender keep the debit order amount the same. This way you won’t even know that you are paying more.
This is the biggest loan commitment that you will make. Paying it off sooner will give you an asset that will only increase in value. Make every effort to divert any extra funds into this loan. No matter how small it will make a difference at the end of the day.