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Updated by April Rose Casiple Semogan on Dec 04, 2020
Headline for 10 Major Tips for Paying Off Your Home Loan Fast
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10 Major Tips for Paying Off Your Home Loan Fast

A home loan is one of the most significant debts that you will have in your lifetime. It is a long term commitment that will meddle with your budget for a long time. Having a home loan means owing a lender hundreds of thousands of dollars. And when we say that it is worth hundreds of thousands, it means it will take decades to repay.

Choose the right loan.

Before you plan about repayments, you should first plan for the right home loan product. You need to think about the features that matter to you the most. Shop around before you make a final decision. This can save you a lot of money in the long run.

Avoid interest only repayments.

Some lenders may offer you to pay just the interest on their home loan products. This may sound appealing because it leads to lower monthly bills, but this kind of repayment does not put any dents into the loan principal. Make sure you get a principal and interest loan so you can start repaying the principal straight away.

Pay higher than you are supposed to.

Pay more than you're supposed to so that you can pay off your loan faster. The excess on your repayments will reduce the loan principal.

Look for a 100% offset account.

A 100% offset loan means that every source of your income goes into your mortgage account. You can use the account to pay for other expenses on top of your mortgage repayments.

Be more practical.

You may need to give up on some of life's luxuries and be more practical. For example, you may save more money by making lunch and dinner at home. You do not have to eat outside every day to feel full. Or maybe switch some brands for a cheaper alternative. You might also want to check what you are spending your money on.

Switch lenders.

Different lenders have different offers, and they change their products every once in a while. This means that a loan that you thought was great three years ago may not be the best for your situation now. Try switching lenders so you can access lower interest rates. This seems like a basic tip, but most people still stay with their lender just to avoid the hassle involved with switching.

Give investing a try.

This tip is risky, it is still best to consult with a professional. If you can successfully invest in shares, you will be able to make a significant earning. Depending on your luck, you might even get to pay off a large portion of your mortgage in one go.

Use your equity.

Equity is the difference between your home's value and the amount of your home loan you have left to repay. Some lenders will allow you to access some of this equity. You can use this amount for making a big purchase instead of applying for a personal loan.

Don't be lazy.

Most people get too comfortable with their mortgage. They just pay what the lenders tell them to pay without keeping a close eye on the industry. Lenders may offer different deals at different points of time. If you wait for the right timing, you can your mortgage and take advantage of a collection of discounts that allow you to repay your home loan faster.

Don't be wary of small lenders.

Most borrowers avoid small lenders. This is because they feel like they can only trust big banks and large lenders. It is undeniable that established banks and lenders offer security since they are less likely to encounter financial difficulties.

This does not mean that you should ignore small lenders entirely. Small lenders can manage their business better since they are small in size. On top of that, you can take advantage of the lower interest rates that these small lenders offer.