Ways to pay off your mortgage faster without ditching your barista coffee

The mortgage is your biggest expense. And while we like the idea of paying the loan off faster, we’re not always so keen on sacrificing our lifestyles.

However, mortgage rates are at an all-time low, and many commentators are predicting they will drop even lower. There’s never been a better time to get ahead of your mortgages payments.

Here are some ways to reduce your mortgage without having to give up your barista coffee altogether.

Get in touch with your mortgage adviser for more personalised advice on the best options for you.

1. Maintain the same repayments even when interest rates go down

Many of us have seen our repayments decrease in line with lower interest rates. And while no one has a crystal ball, New Zealand’s low-interest rates look set to continue.

Tempting though it may be to cash in, try to keep your mortgage repayments the same as previously. After all, you are already used to paying that amount. And repaying a few extra dollars every month soon makes a difference. Plus, if interest rates do go up again, your finances will be better able to cope.

2. Switch from monthly to fortnightly payments

Because there are more than four weeks in a month, this simple step can make a significant impact.

Halving your monthly repayment and paying it fortnightly, will help to fast track paying off your mortgage as you will be paying more each year. Not only will you be paying off the principal loan much faster, but you will also save some serious dollars in interest.

Check out our handy loan repayment calculator to explore the difference changing your repayment schedule could make.

3. Consider refinancing

It may be possible to renegotiate your interest rate to take advantage of the current environment. For example, on a mortgage of $500,000, a rate that’s 0.2% cheaper would see you save around $1,000 a year. And if you put that money back into the mortgage, you could knock 18 months off the term. Important to note that refinance automatically defaults back to a 30 year term so you would need to refinance at the same remaining loan term for this to work.

Also worth considering is changing some or all of your mortgage to a floating rate. Other possibilities include revolving credit facilities and offset or salary credit accounts. With these accounts, your salary is paid directly into the offset account, which reduces the interest payable on your home loan.

There are plenty of refinancing options out there. More detail is available here or contact your mortgage adviser.

4. Look at non-bank lenders

The big banks aren’t the only mortgage lenders in the market. Many smaller specialist lenders are offering competitive loans and interest rates. In fact, these non-bank lenders are often more flexible and responsive than the major banks. And they are just as trustworthy as any of the big names.

Non-bank lenders are a good option for those previously turned down by the banks, the self-employed and those with credit issues.

Let’s talk

Paying off the mortgage faster doesn’t always mean you have to cut back on life’s pleasures. Talk to us to explore the best options for you.

Carie Townley 027 522 8940
Senior Mortgage Broker, Loan Market Whangarei

Carie Townley is an experienced Loan Market mortgage broker with over 14 years in industry. She works with her clients on debt consolidation and securing them the best loan possible – whether it be for their own home or an investment property, and specialises too in with working with the self-employed and first home buyers. As one of the largest home finance brokerages in Australasia, Loan Market enjoys industry links and contacts that mean they are better placed to negotiate on your behalf with major banks and secure lenders – with access to over 800 home loans from a panel of 30 lenders.