Here are some practical ways to save on your home loan
- Easy ways to pay your loan off faster
- Think about potential savings you could make from refinancing
- Consider switching between a variable rate or fixed rate
Who doesn’t want to pay off their home loan faster than anticipated? While it can mean more of a sacrifice in the short-term, it also means more freedom and less financial pressure in the future.
Here are some practical ways to save on your home loan and pay it off quicker.
Paying off your loan faster
An easy way to pay off your loan faster is to switch from monthly to fortnightly or weekly repayments. This has two benefits. First, because interest is calculated daily you will reduce total interest paid. Second, if you pay your repayment every fortnight, rather than every month, you’ll make 26 repayments per year instead of 12 payments, which means you end up paying more off your loan over the course of the year, effectively reducing your interest .
You can also increase the amount you repay each period over the minimum required by your bank. One easy way to do this is to maintain your payments at the current level if the interest rate on your loan goes down. Having a good grasp on your household budget will also help you work out how much extra you could pay off. Finally, you can always make one-off payments (like when you get a big tax refund).
At BankVic we can help you find out what’s possible based on your situation so you can meet your goals sooner.
It’s a good idea to review your mortgage from time to time to make sure you’re on the best product for your needs. While refinancing can seem like a lot of work, it could be worth the potential savings gained by moving to a loan with a lower interest rate.
You might also consider switching between a variable rate and a fixed rate. They each operate differently so it’s a good idea to think about which of these will be best for you over the coming few years. There are some very low fixed rate home loans available right now yet they can have limitations, so you do need to weigh up the pros and cons. Another option is splitting your loan so that one portion is variable and another portion is fixed.
When looking for a loan, make sure you check out whether there are any ongoing costs like annual or monthly fees. An annual fee of $395 can add up to $11,000 over a term of 30 years so if you can find a loan without an annual fee it could be a great saving.
One thing to watch out for when you refinance is to make sure you keep the loan term the same as your current loan. Extending your loan term may lower your regular repayments but will increase the total interest paid (and extend the time taken to pay it off!)
Our team can help you
The BankVic lending team is available and here to help you. Because we’re the bank for Police, emergency and health workers, we understand the unique circumstances borrowers from these sectors have and are expert at finding the right loans for them.
Get in touch with us today on 13 63 73 to find out how we can help you. Our lending consultants can talk to you over the phone or via video conference.
This article was written on 23 September 2020 and the information was current at that time.
Normal lending criteria applies to all loan applications. The information in this article is general in nature and does not take into account your personal situation or needs. Please consider whether it is appropriate for you before acting on this information. Police Financial Services Limited ABN 33 087 651 661 – trading as BankVic AFSL 240293 Australian Credit Licence 240293