Chat with us, powered by LiveChatEvery dollar matters on a mortgage

Every dollar matters on a mortgage

The decision by the Reserve Bank to once again leave official interest rates on hold has left the door open for home owners to maximise the benefits of the current record low interest rates…but it can’t last forever.

So how can you make sure you don’t miss the boat? Well, one of the simplest ways to lock in the current benefits is to make additional payments off your mortgage. With interest rates so low, your repayments are also lower at the moment, so this is an ideal time to make inroads into your loan balance.

By paying more than the minimum amount, your extra repayments will go straight into reducing the principal of the loan rather than the interest. It is important to remember that, particularly in the early years of your mortgage; the large majority of your repayments are paying interest rather than repaying the loan.

Of course, not everyone is able to make additional repayments on their home loan without incurring additional fees. This is particularly the case for people with fixed rate loans. However, it is worth asking the question of your lender.

Remember, not only will additional payments reduce your interest bill by reducing the amount of your loan, it can also act as a “buffer” for the time in the future when interest rates do rise again and your lender recalculates your repayments going forward.

Disclaimer: The contents of this article are believed to be accurate at the time of posting. Any advice here is of a general nature only and has not been tailored to your personal circumstances. Please seek professional advice prior to acting on this information.