Reducing Your Mortgage- 8 ways to cut your mortgage

Your mortgage is likely to be one of the biggest debts you will ever have. households aim to pay it off as quickly as possible to direct funds to an investment portfolio and increase wealth for retirement. There are always more ways to find tune your loan and potentially reduce home borrowings through restructuring or refinancing your loan.

At we will endeavor to help you reach your financial goals as quickly as possible.

1. Look beyond the advertised interest rate when evaluating a loan. Compare the “true” cost of the loan. Take into consideration nominal interest rate plus add on costs such as loan establishment and monthly fees. Compare the “True” rate of interest.
   
   
2. Budget to pay more than the minimum payment. Taking your loan over the maximum term and paying off as much as you can will reduce the overall amount of interest.
   
   Example. For a 25-year loan, the first 10 years you are mostly paying interest. It is worth checking that your loan allows you the flexibility to change or increase payments.
   
   
3. Fortnightly payments rather than monthly payments. You will pay 1 extra payment per year. This will reduce the time it takes to pay off your loan.
   
   
4. Consider an Off Set Account. Money held in an offset account can reduce your interest on your loan. An Offset account is a deposit account, which can be attached to your mortgage account. You can have your salary and any other income deposited directly into this account
   
   For Example a $250,000 mortgage with $5,000 in an Off Set Account will reduce the loan to $245,000 for the purpose of calculating interest.
   
   
5. An All in One Account. You can have your salary paid into your mortgage each month and pay for day to day living utilizing your interest free period that some credit cards offer. This will reduce your overall interest bill. This requires a disciplined approach to reducing your mortgage and may not suit all customers.
   
   
6. Refinancing can be an effective tool. Your circumstances may change during the term of a loan. It is worthwhile looking at the benefit of restructuring your loan arrangements, as you may be able to obtain a more cost effective solution.
   
   
7. Consider A No Frills Loan. You may not require all features on your current loan. Refinancing with a no frills option can potentially save you money.
   
   
8. Honey Moon Interest Rates. Honey moon or low introductory rates are commonly offered to borrowers. Find out what the rate reverts to when this period is over.