There is a growing speculation that 2017 will be the year that the Reserve Bank of Australia will finally raise the official cash rate. If this happens, it will be the first time the central bank will raise rates since November 2010. Rate hike forecasters claim that the recent cuts have failed to create the desired effect of improving the economy and increase inflation.
Also, the US has started to raise interest rates. That matters because they are the foundation of the global economic system and the world’s key reserve currency. Recent housing and lending finance figures released by the Australian Bureau of Statistics show that lending to investors is trending higher once again.
And even if you think that the cash rate won’t rise this year, it’s still unlikely that it’s going to drop anyway.
So either way you decide to look at it, it will be in your best interest to save for a down payment now and get the best fixed rate home loans from Newcastle Permanent Building Society or other top Australian mortgage provider of your choice.
Here are some simple ways to pay off your home loan sooner.
Pay fortnightly. If you’re currently expending a big installment each month, instead only pay half of the sum every fortnight. Why? There are 12 months in the year, but 26 fortnights. So, if you’re paying $2000 a month, you would pay $4,000 a year, but if you switch to paying $1000 fortnightly you’ll end up knocking $26,000 of your loan in the same period.
Maximize your offset account. Your offset account is a popular tool that can save thousands and even years off your home loan when used effectively. It works like a standard transaction account but whatever the amount you have in there offsets your loan balance. So, for example, you have $10,000 saved in your offset account and $200,000 remaining on your loan you’ll only be charged interest on the $190,000. While it won’t change your repayment amount, a greater portion will be attributed towards the principal rather than the interest.
Round up your loan. Another quick strategy is to make your repayment figure easy. For instance, if your current fortnightly minimum is $834 round it up to $900. Given a $300,000 loan at 6.00 per cent and with a 30-year term, this would actually save you approximately 475,000 in interest over the life of the loan as well as shave more than five years of term!
Maximize lump sum payments. Whenever you come across extra money – tax return, bonus, lotto win – spend a bit of it, but don’t forget to put the majority of it towards your home loan, or at least into your offset account. The same logic goes with a pay raise. If possible, dedicate some of that extra income towards your mortgage payment. These small chunks now will surely produce a positive impact in the long run.
Refinance your loan. The number one reason that many homeowners refinance their home loan is to get a lower interest rate on their mortgage. A lower rate may translate to lower payments, which means you’ll pay less for your home overall. You can find the best fixed rate home loans from Newcastle Permanent Building Society where a 2 Year fixed rate owner occupied type is just at 4.24 percent annually. A fixed rate home loan offers you the certainty of knowing what your repayments will be for the fixed rate period.
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