5 surprisingly effective ways to pay off your home loan faster
Do you want to pay off your home loan faster? While investing in a property is rewarding, repayments on your home loan can be a financial burden. From making a big deposit to increasing monthly repayments, there are useful strategies you can use to ensure that your loan is paid off in the shortest time possible. Read our blog post to find out more and visit GotProperty to find affordable homes.
Home loans are typically calculated over a period of 20 years, however, you can settle your loan over a shorter period if you want to.
The standard 20-year loan was implemented as the majority of homeowners need a longer period to pay off their loan. However, settling your loan earlier comes with significant savings so it’s worth trying to pay it off over a shorter period.
If you want to take out a home loan over a shorter period right from the start, you’ll need to speak to your financial service provider so that they can determine whether you have the means to make the repayments for the loan over a shorter term. Even if you opt for the regular 20-year loan, you can still make an effort to pay off your home loan faster.
1. Consider your deposit
The bigger the deposit that you make, the more likely that you are to secure a loan. Your loan will also come with more favourable conditions if you make a bigger deposit. It’s advisable to make a sizeable deposit on your home since a bigger deposit will decrease the amount you need to pay the bank every month as well as the total cost you are liable for.
2. Get the best interest rate
When you’re applying for a home loan, look for the best interest rate. The interest rate has a big impact on your monthly repayments, so try and negotiate with your financial service provider to get the best deal.
3. Increase your monthly repayments
If you have extra cash available each month, pay it into your bond account. The money that you pay over and above your regular repayments will make a significant contribution to settling your loan faster. It will also decrease the overall amount that you are liable for. A great way to raise extra cash so that you can make larger repayments each month is to rent out unused space on your property. Consider using Airbnb to rent out additional rooms to guests. You could also invest in a property that has a granny flat, which you could rent out to tenants.
4. Make repayments early
Interest is calculated by the day so the earlier that you put money into your bond account, the better. It may come across as a small saving, but each saving counts toward reducing your repayment period. Use any extra money you receive, such as work bonuses or gifts, to make earlier and larger bond repayments. You can also take on additional freelance work to earn extra money to pay off your home loan faster.
5. Buy a less expensive home
Consider buying a less expensive property that will allow you to make bigger repayments each month. You can then also afford to pay a bigger deposit on the property if it comes with a lower price tag. This is a good option for first-time property owners as it gives you an entry point into the property market while enabling you to pay off your home loan faster.
This strategy will give you significant savings on interest. Search for deals on property and invest in a home that is within your budget.
Now that you know how to pay off your home loan faster, you can look for properties for sale online. Browse through the listings on GotProperty to find great deals.