Paying off that loan sooner so that you can enjoy your twilight years without shopping around for the best deal on tinned spaghetti.
This dream can seem a bit out of reach for those already on a tight budget, but don’t worry – there are Six Steps that will shave years off your loan at the other end, and have you sipping cocktails on a cruise ship in no time.
Today we will focus on the first step: Choose the right loan in the first place.
There are many home loan choices out there, and it can all seem very overwhelming if you’re about to purchase a property. It might be tempting to keep all of your banking in the same place for simplicity. Many borrowers apply with their current bank, just to get it over and done with.
But the right choice of loan can make all the difference in the long term.
Don’t assume your current bank branch has your best interests at heart, the more interest you pay the more profitable they are.
When some clients of mine and I reviewed their mortgage, we found that they were paying a far higher interest rate than what many lenders were offering to new clients. They refinanced with a new lender to save around 1% on their variable interest rate.
This might not sound like a huge figure, but on their loan of $400k, Liz and John were able to shave $98,529 and five years off their mortgage.
It’s important to shop around for a competitive interest rate, but also consider what sort of loan is best suited to your individual needs.
If you plan to make lump-sum repayments to try and get the loan paid off sooner, you might like to consider a variable rate loan, which usually allows you to make extra repayments, and then redraw that money if necessary.
If you want the security of set repayment amounts, a fixed-rate loan could be your best option.
By taking the time to compare home loan products, you can achieve your financial goals sooner than you thought.
Stay tuned for your next step to becoming mortgage free!