Loan repayment is a dream draw for many people. Getting a loan is difficult, but repaying it can be even more challenging.
It is essential to pay back as soon as possible to save on interest charges. So, here we have several simple tips and tricks that can help you pay off your loan faster.
Check your Loan Score
The excellent time to apply for a loan is when your credit score is at its most optimal condition. However, you do not need to wait till your bad credit. But, yes, it will help you to pay your loan repayment.
Choose the Right Loan
You should select a loan product as per your circumstances. Always consider the features that are vital to you. Such as, you may prefer an offset account to a redraw facility.
If you commit to a long-term fixed-rate loan can hamper your ability to pay down the loan faster. If you try to repay loans more quickly than anticipated, you can add break fees and exit costs. Opting for a variable rate loan so you can make extra repayments might be your best bet.
Avoid Interest Only Repayments
Many loan lenders allow you to pay the interest on the loan. This leads to lower monthly loan repayments, but there’s a catch. If you only pay the interest, your loan principal will be as it is.
It’s the principle that you need to repay if you’re getting your loan cleared. So, make sure you choose a principal and interest loan. It will allow you to start repaying the principal straight away.
Assume your Loan has a Higher Interest Rate
If your loan has an interest rate of 4% and you make the standard repayments. Probably you need to pay the loan for between 20 and 30 years.
Instead of this, if you act as if you have a loan rate of 5% or 6%. It will decrease the loan principal. As a result, you can pay the loan quickly, plus you won’t be in for a shock if the variable rate moves up.
Consider a 100% Offset Account
You can decrease the interest payable against your principal with an offset account. If you manage your finances accurately, you can ensure your withdrawals don’t exceed the amount you pay towards your loan repayment. In essence, you make extra repayments whenever you earn income. This technique enables you to make massive savings.
Change Your Lender
By switching lenders, so you can access lower interest rates. You can speak to a loan consultant to find out if any lenders are available that can save you money.
Moreover, if you need to pay any fees to get out of your current mortgage if all the numbers add up, we suggest you should make a switch between landers. In this way, you can pay your principal faster with the money you save on interest payments if you do.
Ultimately, when you are ready to take out a loan, you must ensure that you have done everything possible to avoid unnecessary complications and costs. The suggestions in this article should help you get rid of your loan burden quickly.
Apt Mortgages is a fully prepared mortgage broker. Our services include One-off purchase loans, Refinance, Property investment loans, Construction loans, business loans, and bridging loans. We help you find the right loan that suits your needs and requirements.