When some people take out a mortgage, whether because of bad finances or hard luck, they struggle to meet their monthly repayments. Many others find paying off their home loan in gradual instalments a breeze.
If you fall in the latter camp – which, hopefully, you do – then you might start thinking about whether it's worth paying a little extra each month to get that home loan paid off faster.
Increasing your mortgage repayments
For some people, this is as simple as just overpaying on their home loan each month. Adding an extra $100-$200 a month on your bill may be the secret to getting your mortgage paid off as quickly as possible.
Bear in mind, however, that increasing your repayments may come with an additional charge for some lenders. Be sure to check before you start wildly spending.
If there is an added charge for increasing repayments, another option is to simply increase your rate of repayment. Rather than sending money off once a month, you could switch to making fortnightly, and even weekly, payments. Many lenders will let you do so without getting home loan refinancing.
Doing so has the potential to save you tens of thousands of dollars worth of interest, by paying down your mortgage as quickly as possible.
What to ask yourself
Again, as good as this sounds, don't dive in without a care in the world. Ask yourself these questions to figure out if it's the right time for you.
What other debts do you have, if any? If you've got money owing on a credit card, it would be a good idea to pay this off first so you don't get mired in interest-created debt. You don't want to get into too much debt too quickly.
You might also want to check out the state of your emergency fund. If you haven't saved up all that much for a rainy day, then now might not be the time to start ramping up your repayments. It's no use clearing your mortgage if there's a stockpile of repairs or other expenses you can't pay for after.
DISCLAIMER: The information contained in this article is correct at the time of publishing and is subject to change. It is intended to be of a general nature only. It has been prepared without taking into account any person’s objectives, financial situation or needs. Before acting on this information, Smartline recommends that you consider whether it is appropriate for your circumstances. Smartline recommends that you seek independent legal, financial, and taxation advice before acting on any information in this article.