Clearing your home loan is one of the most widely known ways to assist in the creation of wealth, yet most people aren’t aware of how simple it is to do.There are some very simple steps any person can implement instantly to help pay off their debt quicker, thus releasing more capital to take a position in home and loan investment properties.
The first easy step is to change your repayments from monthly to fortnightly. There are 26 fortnights in a year and only 12 months, so the way that it works out is you pay back at a marginally higher rate if you go fortnightly -as you pay half your regular repayment each 2 weeks- 24 weeks worth, yet if you pay back bimonthly you pay 26 weeks in the same year.
The subsequent secret trick is to always pay more than the minimum loan payment (assuming your loan allows this without penalties). Make the largest payment you can and keep additional cash in redraw, so it is offset against your loan. That way any money you have in the offset account, you don’t have to pay interest on, and with the money you save you can use to pay down your loan quicker.
The final step is to hang fire till the market bottoms and then if feasible (an it is presently possible today) find a cheap fixed rate with an offset. That way your loan can get cleared quicker at low interest rates, whether or not rates end up rising.
If you are actually lucky you find a product where you can do all three- switch your payment to fortnightly, also pay more off when possible- with the rest in an offset account- or even just leave it in the offset as it makes no difference unless you really take the money out. Do all of this with an excellent low fixed rate!