Why Pay More Than The Minimum Home Loan Repayment?
Provided you have a loan that allows additional repayments, you have the option to pay extra off your loan. Using the above calculator you can work out how much time and interest that can save you. Depending on your deposit it's likely your mimimum mortgage repayment is going to be higher than renting would be. This is tough, but remember - it isn't always going to be that way. Every extra bit you manage to pay off your loan decreases the interest you pay the bank.
At an interest rate of 5%, every $10,000 extra you pay off your mortgage you will save you just over $40 in interest each month. After you've paid $20,000 extra off your loan you'll be just over $80 better off each month. Yes it's hard in the beginning, but the sacrifice soon pays off. It may seem like a mammoth task but it is possible to pay your home off sooner.
Get Yourself A Copy Of The Barefoot Investor
If you want to own your home sooner we highly recommend reading The Barefoot Investor by Scott Pape. It's an amusing guide to managing your money which gives you the tools to pay your debts off and own your home sooner. In The Barefoot Investor Scott recommends contacting a cashback mortgage broker so that you receive the trailing commission refund on your loan each month. This gives you a refund of up to 0.3%p.a. into your bank account each month, so you can pay your home off sooner. Read about how a cash-back home loan works here or contact us for more info or to be put in touch with a cashback mortgage broker now.
A cashback mortgage broker can chat to you about the best types of home loans for making extra repayments, and the best home loan interest rates available. Just give us a call or use the contact us page.