Golden rules to a smart mortgage

Have a strategy.

Our home is often our most valuable asset, so it certainly makes sense to keep our home loan in check. Having a plan around repayment time frames and amounts, loan terms, forecasted life events and property changes means you're in a better position to make smart decisions. Smart decisions when it comes to your home loan can potentially save thousands of dollars and years off your mortgage.

Aim to minimise interest costs.

Interest costs over a long-term mortgage can be staggering. Ways to reduce interest can depend on the flexibility of your home loan but include making repayments fortnightly instead of monthly, increasing regular loan repayments and paying lump sums.

Aim to pay off debt faster than the bank's timeline.

The longest term mortgage is generally 30 years, which results in plenty of interest paid to the bank, and less in your pocket. As an example, switching a $250,000 loan from a 30-year term to a 25-year term could save over $69,000 in interest, based on a 7%p.a. and monthly repayments.

Re-assess regularly.

Use life events and end of fixed-rate periods as triggers to re-assess your mortgage. An increase in income, fewer dependents, a new home or updated interest rate can be great opportunities to work out the best mortgage structure for your situation and goals.

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