A home loan is the largest financial commitment most people will ever have, so of course It makes sense to try and pay it off as soon as possible.
Like most things that sound simple though, it’s not necessarily easy to pay your loan off sooner!
But here’s a tried and tested tip that is guaranteed to work by “tricking” yourself into paying more.
This is how it goes. Take your required monthly home loan repayment and halve it. Using that “halved” figure just adjust your loan payments to be made fortnightly instead of monthly. As easily as that you’ll save thousands in interest. The secret is that by paying that fortnightly amount you’ll actually be paying the equivalent of an extra monthly payment per year.
Here’s an example:
Mary has a $500,000 home loan at an interest rate of 4% and her required payments are $2,650 per month over a 25 month term.
She halves the monthly payment to come up with a figure of $1,325 per fortnight and adjusts her payments accordingly.
Mary will cut about 4 years off her home loan and save around $55,000 in interest!
It’s a strategy well worth considering if you wish to be financially free far earlier than you otherwise might be.
If you would like discuss strategies to reduce your debt quicker, give the team at Steve May a call and start a conversation today.
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Nick Shanley, Steve May, Luke Styles and Shanley Financial Planning T/A Steve May Financial Services are Authorised Representatives / Corporate Authorised Representative of Sensibly Pty Ltd, AFSL 533923. Please refer to our website at www.stevemayfs.com.au to reference our Financial Services Guides.
