Paying Off A Mortgage

When it comes to paying off a mortgage, there are several ways in which someone can save thousands of dollars in interest payments and reduce the term on their home loan in the shortest time that their income allows them to.

Obtaining finance can sometimes be the easy part, it is what is done with the loan product that remains most important when it comes to paying mortgages off.

In an earlier post on principal and interest I discussed the benefits of making additional repayments above and beyond just making the minimal repayments on a loan.

Making just the ‘minimum repayments’ is how the edges make their billions!

If you’re tired of seeing huge profits by edges then make additional repayments!

The longer you have your loan, the more money in interest you pay, and the greater profits bank make!

A shared thought course of action is as follows:

You receive your loan which is over the 30 year standard term, your repayments are reasonable and you nevertheless have money left over after your expenses for savings. “Great!” You think, “I’ll just pay the minimum on my loan and everything is just fine”…

Think again!!

edges make billions in profits every year, because people don’t use their mortgages the correct way…

The longer you are a customer, the more you pay and the more edges make in profit

It’s a simple formula:

People don’t often realize that on a $300,000 home loan over a 30 year term at a continued 7% interest rate they would be paying over $418,527 in interest in addition as $300,000 principal!!!

It is really scary when you look at it this way.

However with an additional repayment of only $100 additional per month, which is not a lot…will save almost $70,000 in interest and approximately 4 years & 2 months off the loan!

There are several ways in which you can succeed in paying mortgages off quickly

The first and most easy way is to make additional repayments which will assist in paying off a mortgage much quicker as we have already discussed in the above example.

I realize not everyone can make consistent additional repayments. However, in any case someone can put their your loan above and beyond the minimum repayments WILL make a difference…AND you can always redraw this back out of the loan if needed

Another way of paying off a mortgage quickly is by an offset facility

By having any spare savings or cash and using an offset facility will dramatically increase your ability to pay mortgage off quickly and save thousands of dollars in interest payments.

An offset account is a savings account which is connected to the loan. One can deduct the savings balance from the loan balance and this is what daily interest will be calculated on.

Another of paying off a mortgage is with a transactional loan account

Transactional accounts are where every bit of your income goes straight into the loan facility. This may include salary, rental income…everything!

The assistance of this is that the loan balance is reducing consistently and at a greater rate as all the income is being directed into the loan facility. A customer will then draw out the required funds per month or per week to live on.

Transactional accounts are for those who are good at managing their money, as there should always be a large sum obtainable in redraw and so for those who are tempted, these funds could be easily drawn out and put to use for shopping or a holiday! and not paying off a mortgage…

Additional Repayments – MUST DO’S

– make them often

– put additional money into the loan

– put any lump sum payments such as inheritance or tax refund into the loan

– choose a product that allows no maximum amount on additional repayments and no penalties to make additional repayments

– make sure the product has a free or (low cost) redraw as one can always redraw out these funds if need be

– choose offset account if required for convenience however sometimes offset are at a higher rate, redraw is more than adequate

– set repayments at weekly or fortnightly for greater interest savings

Getting your loan can often be the easy part, it’s what you do with it that is most important when paying off a mortgage!

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