A statistic to be proud of!
We are a conscientious bunch! Nine out of ten mortgage-holding Aussies are in a rush to pay off their home loans, according to new research from finder.com.au.
The survey of over 2,000 Australians found 89% of borrowers have tried to pay down their mortgage sooner, with the majority (60%) of homeowners opting to make extra repayments.
More than one in three borrowers (40%) commit to making more frequent payments either fortnightly or weekly, instead of monthly.
Rounding out the top three ways borrowers’ fast-track their home loan repayments is using a linked offset account (with 34% opting for this strategy).
Women are marginally more likely (90%) than men (88%) to pay down their mortgage faster, while Baby Boomers (18%) are twice as likely as Generation X (9%) to have never tried paying off their mortgage faster.
Top five ways Aussies pay off their mortgages faster
Extra repayments. Making additional repayments on your home loan is a smart way to minimise your interest payable and reduce your loan term.
Pay fortnightly instead of monthly. Many home loan customers opt for monthly repayments by default, but making more regular repayments on a weekly or fortnightly basis could lead to significant savings. However, before going down this path, check to see how your lender calculates interest.
Utilise an offset account. Similar to a transaction account, an offset account effectively reduces or ‘offsets’ the interest on your home loan by the amount held in the account. For instance, if you had a 100% offset account with $40,000, on a home loan of $500,000; you would see interest-only calculated on a balance of $460,000 instead of $500,000.
Bump up mortgage repayments. In the same vein as making additional repayments, you can service your debt faster by rounding up your periodic repayments. For example, if your monthly repayment is $1,564 you may want to round up this figure to $1,570 or even $1,580 – you’d be surprised at how far a small amount can go if you do this regularly.
Negotiate a lower interest rate. In a low rate setting, there are many competitive offers in the market and negotiating a lower interest rate is another way to save on your home loan. If you’re negotiating a better rate with your existing lender, use your customer loyalty or your repayment history to your advantage – most banks will want to keep your business and will be willing to issue a rate discount.
If your bank isn’t willing to budge, consider refinancing to a lender that provides more competitive interest and suitable features.