Do you ever feel like the bills just keep coming? Are you suffering from a serious case of the budget blues, and wish you could splurge on something special every now and then?
How much difference would it make if you could pay off your mortgage five or six years ahead of schedule?
Well, there are six simple steps that you can implement now, to lower the total amount and length of your home loan.
In the past weeks, we looked at Steps 1 to 4. You saw how choosing the best possible loan product could make a big difference to your back pocket. How changing the frequency of your repayments could lower your interest. Why it makes sense to pay more off your loan whenever possible, and how to make the most of handy features like offset accounts, and redraw facilities.
Now a little warning for you – if it sounds too good to be true, it probably is.
Step 5: Don’t take candy from strangers.
It might seem like a wonderful offer – “Low introductory rate for the first 12 months”. If you’re buying your first home, you might imagine this to be a great way to ease into home ownership without being hit too hard by the loan repayments.
But just as Christmas always comes around sooner than you think – so too does the end of the honeymoon period. For many borrowers who haven’t done enough homework, this anniversary can bring very bad tidings in the form of a whopping repayment increase.
What would you do if you suddenly had to come up with an extra $400 per month? ‘That’s not too bad’ you might say. But what if this month you also received your council rates notice, car registration, power bill and water bill? You might start to notice the difference.
Before jumping head-first into an attractive introductory rate loan, make sure you take the time to compare the ‘post introduction’ rate with other loans on the market. What really counts at the end of the day, is how much you will pay for the other 29 years of the loan. This is where an expensive loan product could really make an impact on your ability to achieve your financial goals.
Want to learn more about becoming mortgage free? Stay tuned for Step 6: Get a better deal – refinance your loan.