5 tips to pay off your home loan faster

Most banks offer up to 30 years to pay off a home loan, but that doesn’t mean you can’t pay off your loan sooner. We spoke with PPT Capital Lending Consultant Ben McDonald who offered 5 great tips to pay off your home loan faster and save tens of thousands in the process.

1. Negotiate a lower interest rate

This is the easiest one of all, but it’s amazing how many home owners don’t negotiate when it comes to rates.  For example, with a loan of $500,000 you could save up to $31,131 over the loan term if you reduced your loan rate from 4.15% to 3.85%*.

2. Pay more than the minimum amount

Although it might take a little more effort, try and make additional regular payments over and above your minimum repayments. For example, with a loan of $500,000 you could save up to $26,600 per year* by paying an extra $100 per week. Chances are you won’t even miss the extra repayment!

3. Pay a lump sum off your home loan

During the term of your loan there’s always a chance that you might be presented with a lump sum of money. This could be from an asset sale, inheritance, sales bonus, or if you’re lucky, the lottery!  Paying this on to your loan, rather than spending it, could save you tens of thousands of dollars and have your loan paid off early.

 4. Consolidate your debts

If you have fallen into the consumer credit trap with multiple credit cards and/or car loans, and are struggling to pay them off, talk to your broker or bank and see if you can roll them into one loan. The home loan will have a much lower rate and save you plenty of interest payments.

 5. Review your home loan annually

Last but not least, review your home loan every year. As we move through life our circumstances change. The loan that you took out ten years ago, might not suit your needs today. By reviewing your home regularly ensures you get the most competitive rate and a loan package that suits your current situation.

* Based on a $500,000 loan, 3.85% interest rate, with monthly payments over a 30 year term. This does not take into account fluctuations in interest payments or bank fees and is provided as indicative guide only.