Last Updated: 4th September, 2023

Owning your own home is a big step and we know it can be a bit confusing. Figuring out how home loans and repayments work might seem tricky, but don’t worry – we’re here to help you understand. Whether you’re thinking about buying your first home, changing your loan, or getting the most out of your mortgage another way, we’ve got you covered. Let’s learn how to handle your loan repayments in a smart way.

Understanding Your Cashflow

Knowing how much money you have coming in and going out helps you understand how large a repayment you can make. Once you know this, you will have completed the first important step to managing your mortgage well. At some point, you may start earning more money, and it might be tempting to spend more on non-essentials. But using some of that extra money to pay off your mortgage faster can be better in the long run. Always think about your budget. Small changes, like eating out less or cutting back on entertainment, can make a big difference in how quickly you repay your loan.

Managing Repayments

You already know that paying back your loan on time is important. So it’s a good idea to line up your repayment schedule with when you get paid. This way, you’ll have the money ready when it’s time to pay. Whenever you can, try to make extra repayments. This helps you pay off your loan faster, which means you’ll pay less in interest for the life of the loan and gain equity more quickly. Be careful about agreeing to longer loan terms. They might sound good because the monthly payments are lower. But choosing a shorter term can save you money in the long run. It’s like investing in your future financial freedom.

Tools To Help You

There are tools that make handling your mortgage easier. One trick is linking your loan to special features, such as an offset account or redraw facility. The amount you have in an offset account reduces the principal on which your interest payment is calculated. A redraw facility allows you to make extra payments to your mortgage but withdraw them if you find later that you need the money. Both these features can lower the interest you pay over the life of the loan. We are committed to helping you get the best deal on your loan. Our brokers regularly explore the market for refinancing opportunities that can result in interest savings or other benefits for clients. We also perform an annual review of your loan terms to ensure that your loan structure still suits your plans. Sometimes circumstances change, and your loan should change with them.

Have A Backup Plan For Income

Having a safety net is important. If you lose your job or have health problems, it’s good to have a backup plan. An emergency fund is like a shield. It protects you from unexpected expenses or times when you’re not earning as much.

Getting Rid Of Debts

If you have other debts with high interest rates, it might be smart to combine them with your home loan. This can consolidate and simplify your repayments and save you money by lowering the interest you pay. Being careful with taking on more debt is a must. Avoid any debt that would make your repayments too large for you to pay them.

Boosting Your Income

If you can, you might earn extra money by renting out a room in your home. Also, bonuses or inheritances can help you pay a big chunk of your mortgage all at once. This quickly lowers how much you owe. Investing in things like shares or mutual funds is another way to grow your money over time.

Choosing The Right Home And Loan

Where you buy your property can affect how much it’s worth in the future. Picking a place that’s likely to go up in value is smart for your finances. Although expensive homes might look nice, getting a more affordable one can make your mortgage easier to handle. And if your current home is too big for your needs, selling and getting something smaller can free up money.

We’re Here For You

Big decisions about loans require expert advice. Professionals can help you understand your options and make the best choices for your money. Our mortgage brokers are experts in finding the right loan for you. They know home loans and can guide you through the entire process. They can also negotiate with lenders about loan terms on your behalf, to help you get better deals. We’re here to guide you through the world of home loan repayments. We want you to feel confident and informed when making decisions about your money. Don’t hesitate to call us at 1300 889 743 or fill out our free online assessment form and to speak with one of our brokers. We are passionate about making things clear and helping you reach your goals, starting right here.