Six ways to pay off your mortgage faster
Paying off your mortgage early will save you money and take a financial load off your shoulders. Here are some ways to get rid of your mortgage debt faster.
Switch to fortnightly payments
If you’re currently paying monthly, consider switching to fortnightly repayments. By paying half the monthly amount every two weeks you’ll make the equivalent of an extra month’s repayment each year (as each year has 26 fortnights).
Make extra payments
Extra repayments on your mortgage can cut your loan by years. Putting your tax refund or bonus into your mortgage could save you thousands in interest.
On a typical 25-year principal and interest mortgage, most of your payments during the first five to eight years go towards paying off interest. So anything extra you put in during that time will reduce the amount of interest you pay and shorten the life of your loan.
Ask your lender if there’s a fee for making extra repayments.
Smart tip: Making extra repayments now will also give you a buffer if interest rates rise in the future.
Find a lower interest rate
Work out what features of your current loan you want to keep, and compare the interest rates on similar loans. If you find a better rate elsewhere, ask your current lender to match it or offer you a cheaper alternative.
Comparison websites can be useful, but they are businesses and may make money through promoted links. They may not cover all your options. See what to keep in mind when using comparison websites.
Switching loans
If you decide to switch to another lender, make sure the benefits outweigh any fees you’ll pay for closing your current loan and applying for another.
Switching home loans has tips on what to consider.
Make higher repayments
Another way to get ahead on your mortgage is to make repayments as if you had a loan with a higher rate of interest. The extra money will help to pay off your mortgage sooner.
If you switch to a loan with a lower interest rate, keep making the same repayments you had at the higher rate.
If interest rates drop, keep repaying your mortgage at the higher rate.
See what you’ll save by making higher loan repayments.
Consider an offset account
An offset account is a savings or transaction account linked to your mortgage. Your offset account balance reduces the amount you owe on your mortgage. This reduces the amount of interest you pay and helps you pay off your mortgage faster.
For example, for a $500,000 mortgage, $20,000 in an offset account means you’re only charged interest on $480,000.
If your offset balance is always low (for example under $10,000), it may not be worth paying for this feature.
Avoid an interest-only loan
Paying both the principal and the interest is the best way to get your mortgage paid off faster.
Most home loans are principal and interest loans. This means repayments reduce the principal (amount borrowed) and cover the interest for the period.
With an interest-only loan, you only pay the interest on the amount you’ve borrowed. These loans are usually for a set period (for example, five years).
Your principal does not reduce during the interest-only period. This means your debt isn’t going down and you’ll pay more interest.
Source:
Reproduced with the permission of ASIC’s MoneySmart Team. This article was originally published at https://moneysmart.gov.au/home-loans/pay-off-your-mortgage-faster
Important note: This provides general information and hasn’t taken your circumstances into account. It’s important to consider your particular circumstances before deciding what’s right for you. Although the information is from sources considered reliable, we do not guarantee that it is accurate or complete. You should not rely upon it and should seek qualified advice before making any investment decision. Except where liability under any statute cannot be excluded, we do not accept any liability (whether under contract, tort or otherwise) for any resulting loss or damage of the reader or any other person. Past performance is not a reliable guide to future returns.
Important
Any information provided by the author detailed above is separate and external to our business and our Licensee. Neither our business nor our Licensee takes any responsibility for any action or any service provided by the author. Any links have been provided with permission for information purposes only and will take you to external websites, which are not connected to our company in any way. Note: Our company does not endorse and is not responsible for the accuracy of the contents/information contained within the linked site(s) accessible from this page.
Buachailli Pty Ltd ABN 57 115 345 689 atf Harlow Family Trust t/as Queensland Financial Group is a Corporate Authorised Representative of Synchron AFS Licence No. 243313 This advice may not be suitable to you because it contains general advice that has not been tailored to your personal circumstances. Please seek personal financial advice prior to acting on this information. Investment Performance: Past performance is not a reliable guide to future returns as future returns may differ from and be more or less volatile than past returns.
Three top strategies for setting goals you can actually achieve
Setting goals for yourself and your business is sometimes easier said than done. Productivity coach, Chelsea Pottenger, shares some handy tips to set effective goals – and achieve them!
A new financial year is a great time to pause, review and evaluate your goals. Asking yourself and your team if you are on the right track? If your daily activities match your goals? Whether you even set up the right goals to start with?
A mistake we can all fall into is setting up big goals, only to discover we aren’t following through to achieve them. You can stop that happening by using a framework that will not only help you set up your goals but achieve them as well.
So, what is a goal?
A goal is simply a future desired outcome. Your goal could be to ‘increase yearly revenue by 25 per cent’ or ‘to create a more connected culture’.
Whatever your goal is, it’s important to consider how you want to feel, the specific action of the goal and how you are going to achieve it.
Clearly articulated goals help trigger new behaviours, which prompt new habits, allowing you to work more efficiently and effectively towards achieving your goals.
Three steps to successful goal setting
Step 1: Start with your values
Your values are your ‘why’. They are the things you believe are important. They determine your priorities and help measure whether you are fulfilled. Your values will help guide why you are making the goals you are, and ensure they are aligned with the purpose of the business.
Write down three values and then process why they are important.
Step 2: Determine how you want to feel
This part may not seem that important, however cognitive therapy tells us that when we can harness the emotion we would feel by achieving our goals, we will better understand our ‘why’ and intrinsic motivation, prompting us to put more energy into achieving them.
Ask yourself:
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Do you want to feel successful?
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Do you want to feel abundant?
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Do you want to feel energetic?
Before writing down your goals, clearly identify how you want to feel and return to this feeling when finding your intrinsic motivation.
Step 3: Set S.M.A.R.T Goals
S.M.A.R.T goal setting is a widely proven formula for success. The acronym ‘S.M.A.R.T’ stands for Specific, Measurable, Attainable, Relevant and Timebound.
Writing goals in this format prompts you to be crystal clear about what the desired outcome is and how you are going to achieve it. For example, if your goal is to support employee wellbeing, we would break down the goal like this:
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Specific: Introduce a twice a week wellbeing program for my employees.
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Measurable: I will survey my employees on what types of fitness and mindfulness they would like to be included in the wellness program.
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Attainable: I will outsource a fitness trainer and meditation/mindfulness coach. I will spend two hours per week working with them to curate sessions for the program.
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Relevant: Supporting my employees’ wellbeing will increase their happiness, productivity and performance at work.
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Timebound: I will start working on the program tomorrow and have it up and running in six weeks time.
Now you have set your goals, you need to achieve them.
3 strategies to help you stick to your goals
1. Treats and rewards for the brain
Reward yourself along the way. Celebrate each milestone that gets you closer to your goal.
2. Pre commitment and accountability
Consider getting an accountability partner. This could be a spouse, friend, colleague – someone to celebrate the wins along the way and offer a fresh perspective.
3. Intrinsic motivation
Check on your ‘why’ and what motivates you. When our behaviours match our values, it means our goals are aligned with our purpose and we feel a stronger drive to achieve them.
Source: Flying Solo August 2022
This article by CHELSEA POTTENGER is reproduced with the permission of Flying Solo – Australia’s micro business community. Find out more and join over 100K others https://www.flyingsolo.com.au/join.
Important:
This provides general information and hasn’t taken your circumstances into account. It’s important to consider your particular circumstances before deciding what’s right for you. Any information provided by the author detailed above is separate and external to our business and our Licensee. Neither our business, nor our Licensee take any responsibility for any action or any service provided by the author. Any links have been provided with permission for information purposes only and will take you to external websites, which are not connected to our company in any way. Note: Our company does not endorse and is not responsible for the accuracy of the contents/information contained within the linked site(s) ac www.flyingsolo.com.au
Buachailli Pty Ltd ABN 57 115 345 689 atf Harlow Family Trust t/as Queensland Financial Group is a Corporate Authorised Representative of Synchron AFS Licence No. 243313 This advice may not be suitable to you because it contains general advice that has not been tailored to your personal circumstances. Please seek personal financial advice prior to acting on this information. Investment Performance: Past performance is not a reliable guide to future returns as future returns may differ from and be more or less volatile than past returns.