Would you like to cut your mortgage by years and pay less?
What if you could get your mortgage all wrapped up in record time, and spend more time doing the things you love?
Well, there are six steps you can take now, which will make a real difference to the time it takes to pay off your loan. You could be mortgage-free sooner than you think.
In the past weeks, we looked at Step 1: choosing the best loan, Step 2: changing your repayment frequency, and Step 3: Pay more to pay early.
Today, find out how offset accounts and redraw facilities can help you move quickly towards losing that mortgage forever.
Step 4: Offsets and Redraws
Do you have a savings account that you use to put money away for a rainy day? You might be surprised to learn that this can save you money on your home loan – even if you keep the money in savings. This is commonly referred to as an offset account.
Many lenders offer a 100% offset account which, when linked with your mortgage, can dramatically reduce the interest that you pay on your loan. The reason for this, is that the savings ‘offset’ what you owe, and you’re only charged interest on your loan amount – minus your savings.
This can have a significant impact on your loan in the long term. For example, if you have a loan of $400k, and keep $30k in an offset account, you could save over $150k in interest over the life of your loan.
Another handy mortgage feature to look out for is a redraw facility. This allows you to make extra repayments on your loan whenever you want, but gives you the flexibility of taking that additional money back in the future if your plans change.
By taking advantage of offset accounts and redraw facilities, you can take control of your financial goals today, and pay your loan off sooner.
Want to escape your mortgage as soon as possible? Stay tuned for Step 5: Don’t take candy from strangers.