Solutions
ARTICLES > How to Get Rid of Your Mortgage Faster – Seven Tips.

How to Get Rid of Your Mortgage Faster – Seven Tips.

stopwatch.jpgFor a long time the traditional Kiwi way of paying off a mortgage was to simply follow whatever the bank prescribed.  However, in recent times more and more of us are realising that there are ways to speed up our repayments saving us both money and time. 

Here are seven tips to help you get rid of that mortgage faster:

1 Start early. 
Whatever strategy you decide on, start early on in your mortgage.  In fact, think about how you will repay your home loan before you even sign up for it.  Perhaps get some advice from a financial solutions company or your accountant.
This is because, with a table mortgage, which most mortgage-holders will have, the early payments are mostly interest.  As time goes on the proportion of interest per payment decreases and the proportion of principal increases.  So, the sooner you begin on a plan to pay off your mortgage faster, the more you save.
2 Make fortnightly repayments, not monthly. 
Make fortnightly repayments, not monthly.  Most banks will set up your mortgage with monthly repayments.  Request fortnightly repayments.  What that means is that, over a year, you will make 26 half-monthly repayments rather than 12 monthly payments – that’s two extra repayments per year.  Doesn’t sound much but it will, over the course of a 30 year mortgage, save thousands of dollars.
A word of warning, however; if you’re paying monthly right now don’t change to fortnightly without asking your bank or FORTIfi Mortgage Broker if you will be charged a restructuring fee.
3 Pay a little more than the bank asks for.
 Any extra money paid into your mortgage should go straight into lowering your principal and therefore lowering your interest owed.  Over the life of your mortgage even a small amount of extra money per payment can save tens of thousands of dollars.
Most mortgage repayments will decrease as time goes by.  Many home owners look forward to this and see it as extra money in their wallet.  However, by keeping your repayments the same throughout the life of your mortgage, you can save tens of thousands of dollars.
4 Make lump sum repayments.
 If you have a tax refund or some other windfall, use it to pay off a lump-sum from your mortgage principal.
You'll need to be careful of two things, however; First, make sure the rules of your home loan enable you to make such a lump-sum repayment without paying bank fees.  Second, ensure the lump-sum is applied to your loan in the way you intend it to be.  If you have any doubts or questions, check with your FORTIfi Mortgage Broker.
5 Check with your bank that any extra repayments are being handled as you wish them to be.
Banks have different ways of handling extra payments made on your mortgage.  Make sure that what you expect to happen is what actually happens.  If you’re unsure, contact the FORTIfi Mortgage Broking Team.
6 Set your mortgage up with part revolving credit.
Of all the tips to save money on your mortgage, this is the most effective.  It can be tricky to set up properly but once set-up, and providing you know how to use it effectively, it can save you tens of thousands of dollars and many years of mortgage repayments.
If you’re using FORTIfi’s MortgagePlan or M-Power programmes you will know about this already.  If you want to find out more about how to save on your mortgage, contact FORTIfi.
7 Track your finances.
Many people could radically improve their personal finances if only they kept track of their income and expenditure.  A great way to do this is by linking FORTIfi’s MortgagePlan or M-Power with Xero, the online money management programme.
Click here to find out more about Xero or contact FORTIfi Financial Solutions.

Click here to go to the FORTIfi Resource Centre.

Signup for our monthly newsletter

It's full of hints about saving money and tips about your personal finances.  Fill in the spaces and click on the sign-up box below

First Name*
Last Name*
Email*

Contact Us

Auckland Phone: 
+64 9 830 2022
Freephone:
0800 50 44 44
E-mail:   info@fortifi.co.nz