Saving Cash

Paying down your home loan is one of the most well known techniques to assist in the creation of wealth, yet most people aren’t aware of how straightforward it is to do.There are some extremely simple steps anyone can implement immediately to help pay down their debt quicker, thus freeing up more capital to invest in home and loan investmentproperties.

The first simple step is to change your payments from monthly to fortnightly. There are 26 fortnights in a year and only 12 months, so the way it works out is you pay back at a marginally higher rate if you go fortnightly -as you pay half your monthly repayment every 2 weeks- 24 weeks worth, yet if you repay bimonthly you pay 26 weeks in the same year.

The subsequent secret key's to always pay more than the minimum loan payment (assuming your loan permits 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 faster.

The final step is to hang fire till the market bottoms and then if possible (an it is at present possible today) find a cheap fixed rate with an offset. That way your loan can get paid down quicker at low IRs, whether or not rates finish 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 little difference unless you really take the money out. Do all of this with a mega low fixed rate!

Brilliant!

Virginia Graham is a mortgage broker at Central Coast Mortgage Broker. Virginia is an author, finance expertand speaker who specializes in helping girls to appreciate finance.