Mortgage holders across the country are feeling the pinch right now as higher interest rates and the rising cost of living hit household budgets hard.
But with a bit of planning, you can fight back by putting in place some mechanisms that work to pay off your home loan sooner.
Finance Focus has put together seven excellent tips to help you boost your savings.
- Use a budget
It sounds simple but it’s a crucial first step. You can use budgeting tools such as Mint, YNAB or PocketGuard that simplify and categorise your spending and finances. Keeping a regular check on your budget makes it more likely you’ll achieve your goals.
- Set a cost-cutting plan
Make realistic changes to spending habits like cutting non-essential streaming services or going out to eat less. Instead of extreme lifestyle changes you can’t maintain, these manageable adjustments can stay around long term and reduce your outgoings.
- Automatic transfers
Instead of running the risk of spending money you shouldn’t, set up automatic transfers for your savings and additional mortgage repayments.
- Review your loan
Every two years it’s a good idea to look at the terms of your mortgage. Circumstances usually change over time so a comprehensive loan review can end up setting you up with a more secure payment structure, making repayments more manageable and freeing up cash flow.
- Find new income sources
On the other side of the coin to cutting back on costs is finding new sources of income. Getting a side hustle you are passionate about can be fun, rewarding and pay really well. You can also rent out any unused assets you have or sell unused goods.
- Lump sum payments
If you come across large amounts of money at once in things like tax returns or work bonuses, it can be a great idea to resist to urge to splurge it and instead make an additional mortgage repayment. Anything extra you tip into your principal and interest mortgage will reduce the amount of interest you pay and help you to pay it off sooner.
- Payment frequency
Making your mortgage repayments more frequent, for example weekly instead of monthly, can be beneficial in the long term. Interest accumulates daily so making this move might mean you save on your overall home loan.