Paying a little extra on your home loan? Perhaps you should consider it. Record low interest rates are giving Australian home owners the best opportunity in decades to get ahead on mortgage payments, for those who have funds available.
According to Smartline Personal Mortgage Advisers, paying an extra $100 a week on the average mortgage could deliver interest savings of more than $115,000 over the life of the loan.
“With the recent RBA decision to hold the cash rate at 2.5% again, current interest rate levels represent enormous savings to borrowers,”said Smartline’s Executive Director Joe Sirianni.
“Consequently, there has not been a better time to make additional repayments on your mortgage for 20 years. It very much highlights the concept of spending money to make money.”
Low interest rates absorb less of a mortgage repayment, freeing up more of the money you’re paying onto your property to be applied to your principal debt.
A $300,000 mortgage at 5% would be paid off your home loan 11 years faster, saving $115,000 in interest, with an extra $100 a week over the minimum repayment.
“There’s no doubt that now is the time to pay down debt more aggressively,” Mr Sirianni said.
“Now is the time for those with a home loan to be making hay while the sun shines.”
Remember that the impact of repayments comes down to the structure of your loans and your individual financial situation. Talk to the professionals and ask how applying some extra money – if you have it to spare – can help you reduce the debt on your home loan.
Story: Venessa Paech Source: www.realestate.com.au