Perth, WA -- (ReleaseWire) -- 02/18/2014 -- With the interest rates currently at historic lows, monthly payments are cheaper than ever. That means it’s more affordable than ever for Australians to get a loan. First Home Owners Centre (FHOC) gives tips for Western Australians to pay off their home loan quicker.
1. Make Extra Repayments
The number one way to pay off a loan quicker is to pay more than the minimum. Extra repayments work to reduce the balance of the loan quicker. Some loans will have strict limits or even bar extra repayments, so home buyers should make sure their loan comes with flexible repayment options.
2. Use an Offset Account
Offset accounts are another way to get a loan paid off early. With an offset account, the balance of the account reduces the principal against which monthly payments are calculated. Homeowners should aim to get a 100% offset so that the amount in the account directly offsets the loan. Offset accounts are only effective if they hold a balance so make sure to keep as much money in the account as possible.
3. Deposit Directly
A great way to make the best of an offset feature is to have income directly deposited into the account. Compound interest means the longer there is money in the account the more effective it is. Savings that aren’t being used currently will go towards reducing monthly payments if they are kept in the account.
4. Pay Down Expensive Debt
Putting money into the mortgage should be the first priority unless there are also credit card bills to pay. Once the minimum payments are made, the decision of where to put extra savings boils down to which debt is most expensive. When it’s between a mortgage or a credit card, generally the credit card interest rate will be higher, meaning the credit card bill should be paid down first.
If there’s a large amount of expensive debt besides the home loan, borrowers can consider the option of consolidating their debt. Consolidating debt lets borrowers pay off more expensive debt with cheaper debt and thus consolidate that higher rate debt into a lower rate loan. For most borrowers this means consolidating their credit card bill into their home loan. If there is a significant gap between the credit card interest rate and home loan rate, consolidating is an effective way to get out of debt quicker.
Pay Debts First
Smart borrowers pay down their home loans and monthly bills as soon as their paycheck comes in. They make sure to take care of the essentials before spending money on anything else. It’s a simple rule but paying off debts first is the number one way to stay current on bills and pay off that home loan quicker.
About First Home Owners Centre
FHOC is the First Home Owners division of HIA award winner Aveling Homes, one of Western Australia’s most quality focused building companies. What this means for you is that above all else, quality and affordability is what you will experience when you choose FHOC.
Visit the FHOC website at http://www.fhoc.com.au for more details about our services and available financing options for first time home buyers.
First Home Owners Centre Contact Information
24/7 Sales Enquiry line: (08) 6144 1088