Saving money on your home loan is very easy if you strategize properly. Many people concentrate so much on the interest rates when shopping for loan. They forget that even the other features are very important. Below are tips on how to save interest on home loans:
Paying in lump sum.
If you decide to pay off in lump sum you are definitely going to reduce the time it will take you to pay the loan. This in turn reduces your overall interest costs. For instance if you decide to pay $10,000 off a loan of $250,000, you are likely to shorten the loan term by around 5 years. This will enable you save a total of $108,000. This is a very large amount of money that you can use in other areas in future.
Increasing the pace of your repayment.
If it is possible, start to pay off your loan more regularly. You can decide to repay your loan weekly or fortnightly instead of monthly. By increasing your payment pace you are likely to save a lot of money. This is because if you decide to pay monthly, you will be making only 12 payments per year. If you decide to pay fortnightly or weekly you will be able to complete your loan repayment within a short time.
Consider a revolving credit account
If you have a revolving credit facility, your loan balance reduces every time you pay your salary into your home loan account. This simply means that you will end up paying less interest. If you decide to use Westpac credit card in making your daily purchases, you can get up to 55 days interest free. After this if you decide to pay off the balance in full, you will end up saving more interest. This is because you will be able to keep you total loan balance lower for a longer duration.
With the current competition among home loan lenders, it is advisable that you get home loan health check. This helps you have the most appropriate and affordable home loan for your needs. Try to find out whether the interest rate of your lender is competitive. Also check the features that you are repaying for that you don’t need. Try and figure out the benefits you are likely to get if you switch lenders or loans. The reason why you need to loan health check is that most of the time your circumstances change without a review on your loan. Make it your culture every three years to consult your loan broker and find out whether your loan is still appropriate. This helps you find out whether there are any chances of lowering the interest rate of your loan.
Checking your statements
The fact is that every human being makes mistakes. Banks are not an exception since they are run by human beings. Sometimes banks can allocate extra charges or fees incorrectly. It is thus advisable that you go through each of your monthly statement and see whether there is anything unusual.
If you follow the above tips, you will find yourself paying lesser interest. High interest on home loans will no longer be an issue to you.
Author Bio: Written by Mercy Karen. She is an avid blogger. She writes article for finance, home décor and business .Presently she is focusing on issues related to land registry. For any queries on land registry contact on land registry number.