Servicing your Loans
1. Make repayments more often
If your loan repayments are monthly, you can make significant savings by making weekly or fortnightly repayments instead of monthly. This will result in you effectively making an extra month’s repayments each year.
2. Make extra repayments
Making extra repayments, both regular and one off, such as when you receive your tax return will reduce your principle. The sooner that you start to make additional repayments the more you will reduce the loan term and total amount paid during the life of the loan. Insist on a redraw facility so that any extra repayments made over and above your normal repayments can be accessed for emergencies.
3. Make your first repayment on settlement date
Your first repayment will usually fall due one month after your loan settles. By making the first repayment as soon as possible you will reduce the principle for the life of the loan and save you significantly in interest.
4. Don’t lower your repayments when interest rates fall
When interest rates are dropped you will be tempted to use the spare funds on other things. By keeping your repayments at the previous level you will keep ahead in your payments and all the time reducing your principle. This will also give you a buffer if rates rise.
For a free, no obligation consultation on which lender will best suit your situation and an accurate assessment of your borrowing capacity and your repayments and associated costs contact Alan