"Hi I work for a Debt Agreement administrator. There are 3 ways to end a debt agreement, you pay it out in full, you can apply to have the agreement terminated (however interest backdates from the start of your agreement), or you can offer to make a…"
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More Tips to pay off your Mortgage
I don't know about you guys, but I'm still waiting for my interest rate reduction to kick in. So I'm working on some top tips on how to put some extra cash into the mortgage.
*If you’re heading into the housing market, make sure you get a package that offers a 100 per cent mortgage offset account. If you already have a mortgage, ask your bank (or in the worst case another bank or mortgage broker) about getting one. Have your salary paid into it, deposit any lump sums like tax returns into it - every dollar in that account will be deducted from the interest you have to pay on the balance of your mortgage. So if you’ve got $100,000 on your mortgage, but $10,000 in a mortgage offset account, you’re only paying interest on $90,000. It saves you money with very little effort – money that’s still available to be used if necessary.
*Set up internet banking, and link your accounts. Make it easy to transfer an extra $5 or $10 into your mortgage account (or offset). Every little helps – an extra $20 per week put into the average mortgage will save around $105,000 in interest on the total loan amount, plus 5 years and 2 months off a 30-year loan term.
*Increase your income. Ask for a raise, look for another job, take a smaller second job, sell some stuff on eBay. Look for opportunities to bring in extra moola you can whack on the mortgage – but for goodness’ sake, don’t exhaust yourself!
*Reduce your expenses. Check your other regular payments – groceries, utilities, insurance car repayments, public transport costs, holidays etc. Can you make savings? Of course you can. Start small. Ring around insurance and energy companies to see if you can get a lower rate if you switch. Re-evaluate your credit cards – reduce them down to one, or consolidate into a new, low-interest rate card. Throw some home brand grocery items into your shopping trolley, buy meat in bulk, or learn some tasty vegetarian recipes.
What do you think? What are some other practical ways to find more money, and repay that mortgage earlier?
*If you’re heading into the housing market, make sure you get a package that offers a 100 per cent mortgage offset account. If you already have a mortgage, ask your bank (or in the worst case another bank or mortgage broker) about getting one. Have your salary paid into it, deposit any lump sums like tax returns into it - every dollar in that account will be deducted from the interest you have to pay on the balance of your mortgage. So if you’ve got $100,000 on your mortgage, but $10,000 in a mortgage offset account, you’re only paying interest on $90,000. It saves you money with very little effort – money that’s still available to be used if necessary.
*Set up internet banking, and link your accounts. Make it easy to transfer an extra $5 or $10 into your mortgage account (or offset). Every little helps – an extra $20 per week put into the average mortgage will save around $105,000 in interest on the total loan amount, plus 5 years and 2 months off a 30-year loan term.
*Increase your income. Ask for a raise, look for another job, take a smaller second job, sell some stuff on eBay. Look for opportunities to bring in extra moola you can whack on the mortgage – but for goodness’ sake, don’t exhaust yourself!
*Reduce your expenses. Check your other regular payments – groceries, utilities, insurance car repayments, public transport costs, holidays etc. Can you make savings? Of course you can. Start small. Ring around insurance and energy companies to see if you can get a lower rate if you switch. Re-evaluate your credit cards – reduce them down to one, or consolidate into a new, low-interest rate card. Throw some home brand grocery items into your shopping trolley, buy meat in bulk, or learn some tasty vegetarian recipes.
What do you think? What are some other practical ways to find more money, and repay that mortgage earlier?
Tags: interest, mortgage, rates, saving
Views: 32
Replies to This Discussion
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Permalink Reply by Sue on -
Hi Natalie,
You made some good suggestions there. For those who do not have an offset account, take your monthly mortgage repayments, divide it by 4, add a bit more to it to make it a nice round figure and pay it weekly. Your interest is calculated on the outstanding daily balance and then debited once a month. There are 4.333 weeks in the month, so by forgetting about the .333 you actually pay close to an extra months mortgage repayment by the end of the year but it doesn't feel like it. By rounding the weekly payment up a little bit, such as if having divided your monthly repayment by 4, you get a figure of $484, then round it up to $500 and make that a direct debit or transfer from your account each week. You will be amazed at the difference that small amount makes. Interest rates have dropped and we hope they will keep going that way, but if you were able to make ends meet while keeping up the higher repayments, THEN KEEP DOING IT.
The offset accounts work well, especially if you get everything paid into it and just live off ONE credit card that offers low rates and 55 days free interest. Check out the interest rate though if you withdraw cash, it can make a big difference. To compare the various credit cards and what they offer, check out a site like www.money.com.au or just google "compare credit cards". Stay away from the ones that offer all the bells whistles and advantages. Just get a stock standard credit card. If you choose one that will allow you to transfer the current balance of your higher paying one, with a low interest for a set period of time, make sure to find out what rate the transfered balance will revert to once the set period is up, and how they divide up the payments that you make, in other words does each payment come off the new purchases, or does some come off the transfered balance.
I have found internet banking fantastic. I set up weekly transfers for all of my utilities, gas, elec, water etc so by the time the bill comes in, I have little if anything to pay, which is a lot better than that sinking feeling when all the bills come in at once.
I would love to hear anyone else's ideas!!
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Permalink Reply by Natalie Bochenski on -
Hey Sue - great ideas.
I particularly like your "rounding up" suggestion - it's a good way of getting more into your mortgage without much effort!
With interest rates hopefully continuing to fall, it's a good time to evaluate whether you need that $50 a month you'll save (or whatever amount your mortgage decreases by). If you've been able to get by, perhaps keep pumping it in - you'll be going above and beyond what you need to, but again with minimal effect on your lifestyle.
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