SAVING OF $70K OFF YOUR MORTGAGE & NOT PAYING ANY MORE IN PAYMENTS

Posted by Henry | BORROWING LENDING,FACTS,MORTGAGES,SAVING | Friday 1 May 2015 12:01 pm

green dollar sign with red house shape logo image www.australianmortgageloans.com.au

Did you know that if you make repayments fortnightly you can repay a principal and interest loan faster?

A lender will typically calculate your loan repayments monthly. But if you can pay half the required monthly amount each fortnight instead of monthly, you’ll effectively make one extra repayment in every year of your loan. This can be easy to do if you can schedule your payment with your pay cycle, and you can save thousands in interest repayments over the life of your loan.

For example, say over 30 years you pay the principal and interest of $2,197 a month on a $400,000 loan with a variable interest rate of 5.20% pa. If you make fortnightly repayments of $1,098.50 you could save $73,840 in interest1.

Take control of your finances

By creating a budget and understanding your cash flow, you will be able to take control of your finances and put in place the necessary steps to pay your loan off sooner. While making one extra repayment annually may not seem like much now, you will stand to save thousands on the interest you pay towards your home loan in the long run.

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Henry Sapiecha

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