Are you the current owner of a rather considerable home loan, or perhaps you will be seeing your mortgage broker in the near future?
Regardless of your situation, you will no doubt have dreamed of the day when you can achieve financial freedom and get the monetary monkey off your back.
According to the Australian Bureau of Statistics (ABS), the average first home loan in Australia is quite substantial, at around $340,000.
You can achieve financial freedom and get the monetary monkey off your back
Furthermore, a report commissioned by the Mortgage and Financial Association of Australia made some astonishing findings, including the fact that the home loan industry has experienced almost 100 consecutive quarters of growth.
Essentially, taking out a home loan is like renting funds – it will cost you more the longer you take to pay it off. In light of this, it would make sense to ensure that you're managing your mortgage as effectively as possible.
There is a plethora of information up for grabs about the nail-biting process of buying your new home, but what about the financial strain after your successful property purchase?
Here are a few tips for attaining financial freedom faster.
Make bigger repayments
If you have enough spare income to cater for larger repayments, the ASIC highly recommends you do so. You can use an online home loan repayment calculator to get a better grasp of your financial standing.
An easy and straightforward strategy is to see your mortgage broker to get the most suitable home loan package, before making your regular repayments as if the interest rate was 2 to 3 per cent higher. This will help shrink your mortgage faster, in addition to making rate changes irrelevant.
Make your repayments more frequent
Have you got a home loan with monthly repayments? Mortgage and Finance Help states that you should consider making it fortnightly, as this will effectively enable you to make 13 monthly repayments – there are more than just two fortnights in a month.
This is in addition to scheduling your repayment dates to coincide with your pay day, as this can help ensure you don't miss payments! Any sudden windfalls like work bonuses, tax refunds or inheritances should be allocated to your mortgage. Your equity will only increase as the amount owed is reduced.
Consider all your options
Your finance broker can help you find the best and most fitting rates for your situation, most often at no cost. A home loan package that is tailored to your circumstances can help significantly reduce the time it takes to pay it off.
They can answer any difficult questions you might have, such as how much can I borrow. You should also do your own due diligence online with a borrowing power calculator to help give you an idea of your financial standing.