This banking hack could save you $86,000 off your mortgage, and it only takes a few seconds. 💸
Some time ago I looked into our loans and realised that we had outgrown our existing mortgage. Don’t get me wrong: for some time it was perfect. I got the 0.8 per cent discount off an already competitive rate, and it had all the bells and whistles we needed while we were renovating.
It’s great to own your own home — but if you take 25 or 30 years to pay it off, the interest will be a killer. Had you made half of your monthly payments on January 15, for example, and the remainder at the end of the month, you would have saved $3.29 in interest at the end of January, which means that an extra $3.29 could have gone towards the principal. The savings may be small but over the long run this will reduce your term and cut a substantial amount off the total interest payable.
On a $500,000 mortgage at 6 per cent over 25 years your monthly repayments would be $3222 and you’d pay over $466,000 in interest. Round up your repayments to $3300 — so an extra $78 a month — and you’d save nearly $29,000 in interest.MAKE ONE-OFF CONTRIBUTIONS An offset is a transaction account that’s linked to your home loan. The money you have in this account offsets the amount you owe, and you’ll only be charged the interest on the difference. And because no interest is paid to the offset account , you pay no tax on the savings interest.
Find out exactly what rate you’re paying and then see if you can find a better deal. Comparison sites like canstar.com.au, ratecity.com.au, mozo.com.au and finder.com.au are a good way to check out what’s on offer, or you could use a mortgage broker.
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