Tips to get ahead on your mortgage

Jemma McDonald is a Client Advocate with Gilkison Group.

Paying off your mortgage can seem like a long haul. In fact, late last year it was recorded that 11% of Australians were struggling to meet their repayments.

So how do we look forward and get closer to the light at the end of the tunnel to reach debt-free status?

The first step is to have a debt management and strategy repayment in place, which is also appropriate to your individual goals and financial situation.

If repaying your mortgage as quickly as possible is a part of your debt strategy, settle in, get a cuppa and have a read of the below tips on getting ahead on your mortgage.

Check your interest rate

Check you’re paying a competitive interest rate and if not, investigate alternative options to switch your loan if your current bank isn’t willing to negotiate.

Check your interest payment

Work out what is being paid in interest as opposed to your repayments. The interest payments are usually always higher than principle repayments. If you start contributing a small additional amount, it can make a large impact over the 20 – 30 year period that you have your mortgage for.

Frequency of your payments

Updating the frequency of your repayments (i.e. monthly to fortnightly). Even this small change will help as there are only twelve months in the year but twenty-six fortnights.

Round up or down your wages

Try rounding up or down your wages received and use what you can from the excess as top up payments.

Link an offset account against your mortgage

Look into offset accounts with your bank. If you offset your savings against your mortgage, you can reduce the amount of interest you pay. If you have $10,000 saved, this will be against your mortgage total to decrease the amount you are charged interest on.

Consider consolidating existing debts

Consolidating your existing debts into one debt can provide some clarity and a clearer mind of what you owe and may potentially save you money, but there are still some things to look out for though.

Things to look out for:

Look into whether there are any fees associated with applications or penalties for paying off existing debts early. Make sure the savings outweigh any costs.
Extending your loan term and don’t focus on paying off the principle. Be aware this could mean paying more in interest over time.
Check to make sure the interest rate is lower than what you’re currently paying.

Avoid an interest only loan

With this type of loan, you are only paying the interest you’ve borrowed. You’re not actually paying off the debt associated with your loan.

Before taking any action, it’s important to seek advice on what is most appropriate based on your individual circumstances.