Smart mortgage strategies and the latest interest rate cut can help you repay your home loan sooner.Hotspot #1: OFFSET ACCOUNT Find out if you have an offset account attached to your loan and if you do, make sure you are using it to your advantage. Why? For a $300,000 loan at 7% interest p.a. over 30 years, you can save at least $33,000 simply by holding an average of $5,000 in your offset account. Hotspot #2: REDRAW FACILITY Funds in a redraw facility lower the principal loan amount of your mortgage. The lower this amount is, the lower your interest owed on that principal is. So if you have a redraw facility, put as much as you can into your loan such as your income and savings, and withdraw only when necessary.Hotspot #3: EXTRA REPAYMENT OPTION Check if your loan has the flexibility that allows you to make extra repayments, and if so, see what difference extra repayments can make.Business and investment experts predict there will be more rate cuts ahead, so it is worth evaluating your current lender and looking at other options. A property loan site, called www.ratecity.com.au, has the following picks:RateCity’s top variable home loans, as at June 5, 20121. UBank, UHomeLoan – 5.83% 2. Loans.com.au, Dream Catcher – 5.85% 3. Bank MECU, Refinance – 5.94% 4. State Custodians, Standard Variable Offset – 6.02% 5. IMB, Budget Home Loan – 6.04%Source: RateCity.com.au, advertised rates, available to the general public, conditions and fees may apply, UBank home loan for refinancing only.
The four rounds of interest rate cuts in Australia have translated to at least $184 left in the pockets of an average household per month, amounting to more than $2,200 of savings a year.
But more than that, there are other ways borrowers can replay their mortgage faster, according to the experts at Mortgage Choice (www.mortgagechoice.com.au).
Among other things, they recommend the following ‘hotspots’ to focus your energies on:
Above information have been sourced from press releases by Mortgage Choice and Rate City.