Did you know that most home-owners are likely to pay two to three times the purchase price of their home in interest payments over the lifetime of a mortgage?

Clients frequently ask questions such as – “How can we save money on our mortgage”? or “What is the best way to be freehold at retirement?”

However – like most things in life there is no one way that works for all, so let’s go over some of the 5 best ways to achieve this: Give A Little

The saying “Rome wasn’t built in a day” is very true in the case of repaying your mortgage. So try to give some of your surplus money from such things as pay increases, or the yearly review of your budget where you find those spare dollars going into someone else’s pocket, and pay yourself first by putting it onto the mortgage. Reducing the term of the Loan

Selecting a shorter loan term will enable significant interest savings. Let’s compare a 25 years term mortgage versus a 30 year term, using $300,000 loan amount at 8% interest rate. Over a 30 year term your total payments will be $792,465 with a monthly payment of $2,201. Over a 25 year term the total payments will be $694,634 with a monthly payment of $2,315. A big difference. Lump Sum Repayments

Lump sum payments can be put on to the mortgage to reduce the length of the loan. It is important though, when making lump sum payments to reduce the term of the loan and not have the bank just reduce the future repayments. Keep Your Repayments The Same

As interest rates come down, if you keep your repayments at the same level as at the higher rate, then this “forced” saving often saves 5 or more years off the time to repay your mortgage. Freehold Fast

Many home-owners find the most effective way to repay your mortgage is to divert all their income directly onto the home loan. Your day to day transactional banking is conducted within the loan account. By placing this onto the mortgage you decrease the balance and therefore the amount of daily interest you are being charged. Every dollar you put onto the mortgage means you will be charged less interest. Many clients are saving tens of thousands of dollars and cutting years off their mortgage with this method. Why Should You Pay Off Your Mortgage – Fast? Here are 4 reasons for wanting to do so:

A bank could foreclose if you were unable to meet your repayments due to some life changing event – ie you became ill, or could not continue earning the income required. After you have paid off your home loan then this frees up your discretionary income to use for investments or a better lifestyle. Most loan terms are 30 years and you will typically pay approx 2 times this with the additional interest. Ie loan $300,000 = an additional $300,000 in interest Wouldn’t it be great to not have to pay the mortgage and to have the lifestyle you want? It will help you to do all those things that you have always wanted to do, like travel, help your children more, spend more time with the family, or perhaps get that new car.

The Last Word

Each individual client and situation requires specific personalised advice to establish the best method to achieve the desired debt reduction goals; and, you always seek specialist advice from an Authorised Financial Adviser.

http://www.broderickconsulting.co.nz We are Christchurch insurance brokers and mortgage brokers who work hard to provide our clients with the best options available. We can provide you with a range of business insurance and personal insurance solutions as well as mortgage financing.

http://www.broderickconsulting.co.nz We are Christchurch insurance brokers and mortgage brokers who work hard to provide our clients with the best options available. We can provide you with a range of business insurance and personal insurance solutions as well as mortgage financing.

Author Bio: http://www.broderickconsulting.co.nz We are Christchurch insurance brokers and mortgage brokers who work hard to provide our clients with the best options available. We can provide you with a range of business insurance and personal insurance solutions as well as mortgage financing.

Category: Finances
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