How To Save Money On My Home Loan In 2024?
One of the most common goals households have is to try and save money. One of the easiest ways to save money is to take a look at your home loan. Fortunately, there are a number of different things you can do with your home loan to reduce your ongoing monthly repayments.
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Find The Best Product For Your Home Loan Needs
If you have stuck with the same lender for a long period of time, it is very likely that you're not on the best product to suit your home loan needs and financial goals.
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By refinancing with us, we can show you how to use the home loan on your family home to set you up in a way that is going to help you achieve your goals.
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In an ideal world you should be reviewing your home loan every 2 to 3 years to ensure it still meets your needs.
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Use Loan Features
If you have a home loan that does not have any loan features then you are missing out on the opportunity of having your money work for you.
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Home loan features such as an offset account is basically your typically everyday transaction account that you put your wages into and take your expenses out of. The remaining balance is use to offset your current loan balance to reduce the principal component and therefore be charged less interest.
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In order for you to get the most out of an offset account you cannot have money sitting elsewhere earning you ~3% - which is taxed - when you can have it sitting in an offset account saving you ~6% interest - which is not tax deductible if it is your family home.
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Making More Payments
By simply changing your repayment frequency from monthly to weekly can help you pay off your home loan 7 years faster!
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However when it comes to your home loan repayment frequency we get our clients to pay in conjunction with there pay cycle from their employment. This generally means fortnightly. By doing this it makes it easier when it comes to budgeting.
Add Additional Funds
As mentioned above, by having funds sit outside your home loan to accrue interest isn't always the best idea as when you earn interest it is considered taxable income. Even if you are earning an interest rate of 8% the net value of this could only be 4.24% if you are taxed at the highest marginal rate - including Medicare Levy.
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Knowing that now would you still consider having funds outside of your home loan where you are between charged between 6-7% interest?
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In summary it may be more beneficial to you if your money is helping you save ~6% interest as apposed to earning you 8% interest and being taxed on that income.
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Consolidating Debts
More often than not, when you have personal or car loans and credit card, these items attract a higher interest rate than your home loan.
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By consolidating these debts into your home loan you can lower your overall repayment. However, in saying this, we recommend keeping your repayment the same - if you can afford to do so - as this will help you pay off the loan sooner as the repayment will now be paying off more of the principal component.
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