How to get mortgage free faster, and save money while you're at it
Paying your mortgage off faster doesn’t mean squeezing every extra dollar out of your back pocket and living on 2-minute noodles (unless that’s your thing of course). Minor adjustments to your repayments can make a big difference over time, saving you thousands in the long run.
Paying your mortgage off faster reduces the overall interest you pay
The thing about interest is that it compounds. When you’re saving money, you earn interest on the interest and so on. When you’re repaying a mortgage, this works in reverse – the less you owe, the less interest you pay. Simply put, small increases in your regular repayments will have a massive impact in reducing your interest costs in the long run.
So, what can you do to reduce your mortgage term?Quite a bit, actually. Even small tweaks can have a huge impact overall. Here are a few of our top tips:
Quite a bit, actually. Even small tweaks can have a huge impact overall. Here are a few of our top tips:
Increase the amount of each payment
Divert any increases in pay or bonuses to your mortgage
As soon as you receive a bonus or get a pay rise, pat yourself on the back and then send the additional funds directly towards your mortgage. Sticking to your budget and putting the extra income into the house will help you to cut down the debt without you even noticing.
Consider refinancing to a different bank
Don't be afraid to break up with your bank. Moving your mortgage to a different lender could save you thousands in interest, and we can do the rate negotiating on your behalf. You can also get a sweet cash back worth up to 1% of the loan value in some cases.
Continue paying the same amount, even if interest drops
If you’re on a floating rate, it can be tempting to drop the volume of your payments if interest rates drop. Continuing to pay the same amount will help you out in the long term, especially when the rates rise again. Stay strong!
Break it down into bite sized chunks
The sheer size of your mortgage can feel overwhelming. But how do you eat an elephant? One bite at a time. Take a chunk of $20k or $30k and just focus on paying that off as quickly as you can off over a couple of years. That suddenly feels like a more achievable goal.
Pay fortnightly instead of monthly
If your repayments are calculated monthly, choosing to split these into two fortnightly payments is an easy way to help you save. As there are more than four weeks in a month, paying fortnightly could mean that you are paying off an additional month’s worth of mortgage every year, helping you to reduce the principal faster.
Get your mortgage reviewed by us. It's free, so why not?
Book a chat with us and we'll give you a call at the agreed time to chat through your current situation and how we might be able to help.
When does it make sense to switch your mortgage to another lender?
The main reason people refinance is to get a better deal. The benefit can be a lower mortgage rate and a cash-back contribution. To make sure it's worth it, you need to weigh up the benefits against the costs of refinancing including break fees and legal costs. What usually makes it worth switching is the cash-back.
A cash-back contribution is a lump sum given to you by the bank at settlement. It can be as much as 1% of the amount borrowed, but depends on what's happening in the market. There are conditions though, and the money can be clawed back within three years if you sell the property or move to another bank within that time.
We work with all the big lenders (and lots of little ones too)
Meaning more options and a better deal for you.
What will my mortgage repayments be?
Work out your regular repayments and how quickly you could pay off your home loan.
Our advisers are here to help you with your mortgage strategy
It costs nothing to have a chat that could save you a bucket load of interest in the long-run. Book a chat and one of our experts will give you a call to discuss your mortgage.
Don’t just take our word for it
Raj
New Zealand
Jessica was/is absolutely a pleasure to work with. She works 100% for her clients, a no-nonsense person with precise recommendation. Thank You Jessica
Jo
New Zealand
Highly recommend Squirrel to sort out a mortgage with the banks takes the hassle out of going to separate banks with so much information they do the hard yards for you - Baz was a superstar and helped me all the way to my new home.
Kat
New Zealand
My Adviser Cade was so awesome!! He was very knowledgeable and made the whole process very easy for me. I am also really happy with the mortgage deal he got for me and how quickly everything was arranged and completed. Will definitely be using Squirrel again.
Anonymous
New Zealand
Very happy with Jessica Carr! Easy to talk to and always happy to answer questions.