Making extra repayments on your mortgage can reduce your loan balance faster and save you a significant amount in interest. Here’s how it works:
Benefits
- Reduced Loan Term: By making extra repayments, you can pay off your loan sooner, potentially shaving years off your mortgage term. This means you’ll own your home outright much faster.
- Less Interest Paid: Extra repayments go directly towards reducing your principal loan amount, which in turn reduces the amount of interest you pay over the life of the loan. For more details, visit our Home Loan Offset Calculator.
Restrictions
- Fixed-Rate Loans: Some fixed-rate loans may have limits on how much extra you can repay without incurring penalties. It’s essential to check the terms of your loan to avoid any unexpected fees. For more information on fixed-rate loans, check out our Advanced Finance Strategies.
Redraw Facility
- Access Extra Repayments: A redraw facility allows you to access the extra repayments you’ve made if you need them in the future. This can provide financial flexibility while still helping you reduce your loan balance faster. For more insights, visit our Redraw Facility page.
Investors: Interest-Only Loans
- Cash Flow Management: For investors, paying interest-only (IO) can assist with cash flow management by allowing you to pay all rental income into the mortgage loan while only making the minimum interest repayments. This strategy can help maximise your investment returns. For more details on interest-only loans, visit our Investment Property page.
Role of Mortgage Brokers
Mortgage brokers play a crucial role in helping you understand and navigate your loan options. Here’s how they can assist you:
Mortgage brokers play a crucial role in helping you understand and navigate your loan options. Here’s how they can assist you:
- Assess Borrowing Capacity: Brokers help you determine how much you can afford to borrow, ensuring you don’t overextend yourself financially. For more information, visit our Borrowing Capacity page.
- Compare Loan Options: They compare various loan products from different lenders to find the best fit for your needs.
- Explain Loan Features: Brokers explain the costs, features, and benefits of each loan option, helping you make an informed decision.
- Manage the Application Process: From pre-approval to settlement, brokers handle the paperwork and communication with lenders, making the process smoother for you.
Check with your mortgage broker to understand the terms of your loan and the best strategies for making extra repayments.
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