Be the boss of your mortgage
You’ve been diligently making your mortgage repayments each month, but maybe you’re thinking, “Is there something more I can do?”. Don’t let your mortgage call the shots – here’s how you can tell your loan who’s boss.
Increase your repayments (a little)
In theory, you probably know you need to attack the principal on your mortgage repayments, but sometimes it can feel like you’re only paying off a mountain of interest. Don’t try to make a huge, unsustainable change – instead, think about making a long-term payment strategy you can work towards. For example, try building up to increasing your monthly payments by 5-10% each year.
Going to struggle with that? How about rounding up your repayments each month? Even $20 or $50 a month will make a difference if it’s going towards your principal – chipping in that little bit extra could help take time off your loan. Making lump sum repayments (think your Christmas bonus, or if you get a tax return) is also a great way to pay down the loan without sacrificing your lifestyle.
Make biweekly repayments
Think twice – every 2 weeks, to be exact. If you’re currently putting money towards your loan once a month, consider switching to paying smaller, more frequent amounts biweekly. Because there are 26 two-week periods in a year, you’d end up sneaking one extra repayment on your loan per annum.
It might not sound like much, but those extra repayments add up, and could help shave time off the length of your loan. It’s a small change that won’t have an immediate impact on your day-to-day bottom line, so you can get a tighter grip on your loan, without compromising on your everyday spending.
Practice financial minimalism
You’ve probably decluttered your closet and that junk drawer in the kitchen, but how about your finances? Financial minimalism isn’t about sacrificing real life stuff for the sake of saving a few dollars. Instead, streamlining your finances can help you gain a clearer mindset, and help you hit those long-term goals, such as your mortgage.
Take a step back and see where you can tidy up the ins and outs of your money. This could include:
- Cutting unnecessary recurring expenses (e.g. do you really need 3 separate TV streaming subscriptions?)
- Automating your bills for roughly the same time so you know exactly what you’re spending and where it’s going each month
- Put your money into 2 simple to manage buckets: fixed costs and spending money. We’ve actually got an in-app tool to help with that – learn more about Free2Spend and how it could help with your finances.
Refinance your mortgage
Just because you’ve got your mortgage on simmer, doesn’t mean you should set and forget it for the next 30 or so years. Instead, regularly keep up to date with what’s happening in the marketplace. This will help you identify opportunities for you to tweak your mortgage, such as rate changes, or new products.
You could also save money by refinancing your loan and capitalising on a lower interest rate. You’ll only know if there’s a better deal out there if you regularly take stock of your current situation. UBank has some great options – you can check out the home loan rates here.