How to pay off your mortgage faster – Here are some tips!

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How to pay off your mortgage faster

It is the age old question “How do you pay off your mortgage faster?”

A home loan is probably the biggest debt that most people have, and if there is a way to pay it off faster then we want to hear it!

Here are some helpful hints on how to pay off your mortgage faster!

Avoid honeymoon rates

A great tip when asking how to pay off your home loan sooner is trying to avoid honeymoon rates.

Honeymoon or introductory rates are a common marketing tool among lenders, however, as a borrower, there are a few pitfalls that can make “Honeymoon” rates not worth the ride once the honeymoon is over.

Honeymoon periods are usually at a low rate, however, the problem comes once this period is over and the lender switches you to a higher rate.

This can be often higher than other rates that are available so you will end up paying more in interest in the end.

If you decide after the first year or two to change lenders and try to get a better interest rate you could be facing steep exit fees.

Making higher repayments can pay off your loan sooner

Making higher repayments can be another great tip when it asking how to pay off your mortgage faster.

If you pay a little extra on your mortgage each time you make a repayment you will be getting a little bit further ahead each time.

Pay as much as you can afford to. This will mean you are paying your mortgage off faster, and while it may sting a little at the beginning, in the long run, you will be paying much less interest over the term of your loan.

how to pay your mortgage faster

Make payments more often

Another good tip on how to pay off your mortgage faster is to make payments more often.

Making weekly payments instead of monthly can make a difference in the long term.

Not only does it give you a weekly budget (meaning you will recognize how much your bills are costing you each week). But it can also get you ahead of your loan because there are more weeks in the year than months (and some months are shorter than others).

Paying weekly means that you will be making an extra month worth of payments in the year!

How to pay off your mortgage faster: Pay off the principal!

You may not be able to do much more than pay off the interest on your loan in the first couple of years, which is a frustration felt by many mortgagees.

Another handy hint when it comes to how to pay off your mortgage or any loans faster is to make extra repayments. This will help you chip away at the actual principle of the loan, which will mean you are paying interest on a smaller amount.

These extra repayments will help you cut years off your home loan that in turn will help you pay less interest in the long run.

Fixed, variable or split: Which rate should you go for?

If you are worried about the fluctuation of home loan interest rates it may be worth having a look at a split home loan.

Split home loans are partly fixed and partly variable loans (Find out the difference), thus giving you the best of both worlds!

This allows you to enjoy the security of a fixed loan as well as the flexibility of a variable loan.

If interest rates go up it will only affect the portion of the loan that is variable, making the interest rate rise less of a burden than a completely variable rate home loan.

It also allows you the freedom to pay that part of your mortgage off quicker.

Pay off your debts!

Combining or consolidating all of your debt can also be a great tip on how to pay off your mortgage faster.

Consolidating your debt will allow you to only be paying interest on one loan and at a good rate! (home loan rates are usually much better than personal loans).

If you are paying interest on several loans such as:

That is a lot of interest! Rolling them all into one will save you paying through the nose in interest!

Finally the best way to pay off your mortgage faster is to consolidate all of your debt into one and pay as little interest as possible!

This general rule can save your thousands over a 20 year period rather than just plugging away paying the same amount each week a few simple tips can help you pay off your mortgage much sooner!

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$300


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Jacaranda Finance does not charge an annual interest rate on SACC loans. These small amount loans incur 'fees' instead of interest. The maximum comparison rate on our loans between $300 and $2000 is 199.43%.

WARNING: This comparison rate is true only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate
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Loan Amount of $1,000 over 6 months repayable weekly (25 weekly repayments). $1,000 (Principal Amount) + $200 (20% Establishment Fee) + $240 (fees based on 4% per month over 25 weeks) = $1,440 total repayable in 25 weekly installments of $57.60.

Loan Amount of $1,000 over 12 months repayable weekly (50 weekly repayments). $1,000 (Principal Amount) + $200 (20% Establishment Fee) + $480 (fees based on 4% per month over 50 weeks) = $1,680 total repayable in 50 weekly installments of $33.60.

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Annual Percentage Rate (APR) starts at 20.56%
Comparison Rate is 20.56% per annum.

This comparison rate is based on a medium amount credit contract of $2,500 repaid over 2 years with a $400 establishment fee and APR of 20.56%.

WARNING: This comparison rate is true only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate
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Loan Amount of $3,000 over 18 months repayable weekly (78 weekly repayments). $3,000 (Principle Amount) + $400 (Establishment Fee) + $555.83 (reducing interest*) = $3955.83 total repayable over 18 months with weekly installments of $50.71.

Loan Amount of $4,500 over 24 months repayable weekly (104 weekly repayments). $4,500 (Principle Amount) + $400 (Establishment Fee) + $1081.85 (reducing interest*) = $5981.85 total repayable over 24 months with weekly installments of $57.51

* Reducing interest means that the 20.56% APR is applied to the outstanding balance on a loan. When a loan repayment is made, the loans outstanding balance goes down and the APR is applied to that lower balance. Therefore, the interest component of the loan will constantly reduce (as long as repayments are being made!) - thus it is called reducing interest.
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Annual Percentage Rate (APR) is 12%
Comparison rate is 19.88% per annum.

WARNING: This comparison rate is true only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate
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Examples

Loan Amount of $5,000 over 18 months repayable weekly (78 weekly repayments). $5,000 (Principle Amount) + $1831.16 (Interest) = $6831.16 total repayable over 18 months with weekly installments of $87.57.

Loan Amount of $10,000 over 24 months repayable weekly (104 weekly repayments). $10,000 (Principle Amount) + $5041.72 (Interest) = $15041.72 total repayable over 24 months with weekly installments of $144.63.

* Reducing interest means that the 19.88% APR is applied to the outstanding balance on a loan. When a loan repayment is made, the loans outstanding balance goes down and the APR is applied to that lower balance. Therefore, the interest component of the loan will constantly reduce (as long as repayments are being made!) - thus it is called reducing interest.
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