You have bought your dream house and now its time to pay it off. Here are some tips on how to pay off your loan faster.
1. Make frequent partial repayment
When you make partial repayment to your loan, you are actually paying off your principal. This will help you to save thousands of dollars in interest or help you to reduce your tenure. Another tip, choose a loan that allows you to make partial repayment at no admin fees.
2. Change your tenure
The longer you service the loan, the bigger the cumulative interest will be. Do ask the banker to try out various tenure for you. Sometimes the instalment may just be a $100 more per month with the tenure shorten by 5 years, hence savings you thousands in interests.
3. Pay for interest rate hikes
With the prospect of rate hikes, it’s prudent to allow for a couple of rise in interest rates. Ensure that you can afford the instalments or you may end up in a bigger loan.
4. Monitor you expenses
Give up smoking or downgrade to a smaller car. You will be amazed at how much money you can save by giving up some little luxuries. Your savings can go towards reducing your loan.
5. Start a regular savings account
Start to save a small amount of money into a savings account. The money will enjoy higher rate of savings, and when it matured, you can use it to do a partial repayment.
Do check with the banks for better mortgage refinance packages frequently. Nowadays there are packages in which the banks will absorb your penalties. This means you can refinance earlier without any penalty. Even if you are not ready to refinance, you should check with your existing loan provider if there are options that you can tap into to reduce your interest.