Even though interest rates in Australia have been sitting at a pretty low base in recent years, it still makes sense to try and pay off your mortgage as soon as you can – or at least bring it down so you can free up some cash to put into your next property. And while paying off your mortgage may seem like a challenge, a few small actions now can make a big difference in the long run.
- Manage income and expenses : Very few people have any real idea where their money goes each month. In fact, if they did know, they’d most likely be pretty alarmed at just how much they spend on discretionary treats. For example, just one takeaway coffee each day could be costing you around $1,400 each year.To get a clear picture of what you’re spending, write down every expense across the course of a fortnight/month, also making allowances for other living costs such as power and gas, phone and internet, monthly subscriptions, motorway tolls, car registration and servicing, insurances, rent, gym memberships, loan repayments etc. It is a lot of work, but you can alleviate much of it by signing up with the WhiteStar Money app and letting it take some of the stress out of keeping tabs on your spending.Knowing what you’re spending, and where, is essential for identifying areas where you can make savings, which can then be channelled into paying off your mortgage.
- Understand your credit file : If you are applying for finance or looking to refinance your mortgage, it really pays to understand how your credit file operates – especially since the way it works has changed recently.In the past, only negative events such as defaults and bankruptcies were recorded. Since the introduction of Comprehensive Credit Reporting however, banks and other lenders are able to provide a lot more of your credit data to credit bureaus, including the type and amount of credit you’ve applied for, your repayment history, dates you opened and closed accounts etc.This new information will likely change your credit score, so it’s handy to know what banks and lenders can now find on your files. And remember, there are three reporting agencies, and three scoring agencies, and not all lenders use the same ones, and not all agencies use the same criteria, so it’s wise to check them all.
- Consolidate high-interest bad debts into your mortgage : Discuss with your lender the possibilities of consolidating all your high-interest or bad debts into your mortgage and make the most of its much lower rates. Then use the savings from those high interest debt repayments to help pay off your mortgage.Not only are you saving yourself money and investing it (hopefully) in a growth asset, but by bringing those other debts under one account, you save yourself time keeping track of different repayments and financial obligations.
- Ask your bank some tough questions : There has never been a better time to reassess your current mortgage situation. Of course, banks will be quite happy for you to continue paying what you are, but when asked some tough questions, they’re more likely to make concessions in your favour than lose your business altogether. That’s why it’s important to understand your mortgage, the interest rates you’re paying, the interest rates you could be paying, the fees you’re being charged and if there are any better options out there, taking into account any exit fees or penalties.Review your mortgage and check with a WhiteStar mortgage broker to see if there’s a better option for you.
- Keep your documents together and in order : Up-to-date paperwork makes it a lot easier to plan for paying off your mortgage. With all the relevant information at your fingertips, you’ll have a clearer and more accurate snapshot of where you’re at. You’ll know what payments you owe and your financial obligations. Once again, the WhiteStar Money app can take a lot of the stress out of keeping all your important financial data in one spot.
Chat to a WhiteStar Mortgage Broker today.