Cutting your Loan End Date by Years
With interest rates the lowest they have ever been, it’s time to talk about how you can take advantage of this opportunity and secure financial freedom earlier than anticipated.
Whilst reducing rates, and repayments, is going to give you more money in your pocket, why not consider a different approach and request your lender to keep your current repayment prior to the latest rate drop… or even better still set it back to an even higher repayment. The interest charged on your loan is going to stay low so anything you set above that is going to come off the principal and could cut your loan end date down by years
As an example, on a $300,000 Mortgage at 3.7%, your repayments would indicatively be $1380.85. With rates moving by .15% on average your new repayment would be $1355.52. If you continue to make a repayment of $1380.85 on the lower rate, you would save 11 months off your loan and approx. $6,860 in interest over the term of the loan.
Imagine if you set your repayments even a little higher (as let’s face it rates have been higher and you managed fine). As an example using the above scenario, if you changed your repayment to $1500 a month (approx. $33 a week more than the new min), you would save 4 years and 8 months – and over $33,000 in interest!
If you want to know how to make this happen with your particular lender shoot me an email or give me a call.