Quick reminders on how to pay down your mortgage faster

Even if you are an established mortgage holder it’s always good to remember that today’s actions can have a positive impact on your future financial position. Here are some quick reminders on how you could do that.

1. Consider your loan structure

Your mortgage structure. should be tailored to your personal situation and goals – and that’s why getting personal advice matters so much. From fixed to floating you can understand more of your options here.

2. Make extra repayments

Paying more than your minimum repayment is a simple and effective way to shorten your loan term and build equity.

Even small increases to your regular repayments can significantly add up over the life of the loan and potentially shave years off your mortgage. Use the Extra Repayments Calculator to explore how much interest you could potentially save.

3. Add a lump sum payment

If you have extra cash when your fixed term expires, it can be helpful to use this to pay down some of the mortgage. In some instances you can also pay a lump sum on your loan during your fixed term, another thing to check with your adviser.

5. Switch to fortnightly payments

Switching to a fortnightly repayment schedule could reduce your loan term and interest costs with minimal change to your budget.

By paying half your monthly repayment amount every two weeks, you effectively make the equivalent of 13 monthly payments per year instead of 12. That extra portion goes directly to principal, helping you get mortgage-free faster. For example, on a $500,000 loan at 6% with a 30-year term, changing from monthly payments of $2,997.75 to fortnightly payments of $1,498.88 you save about $124,060and shave 5.46 years (5 years and 6 months).*

While these changes may seem minor, they’re often overlooked. By making the effort to implement these strategies now, it can lead to significant long-term benefits. If you’d like support to explore your options, reach out to your local Mike Pero Mortgage Adviser today.

*Based on a loan amount of $500,000 on 30-year term with an interest rate of 6% p.a. and monthly repayments of $2,997.75. These figures are calculated based on fortnightly repayments of $1,498.88, repayments being made on time, and the current interest rate staying the same for the term of the loan (which is likely to change over time).

Lenders use different methods to convert monthly repayments into fortnightly amounts. Some divide your annual repayment by 26, while others simply halve the monthly repayment. Only the half monthly method results in paying the equivalent of 13 monthly repayments per year, which is what reduces interest and may shorten the loan term.