Finding the right home loan and the best way to pay it off can seem insurmountable alone. But with the help of an experienced broker, it’s much easier finding terms that will suit you. Read on for our guide on why and how to repay your home loan quickly.
The most common home loans
It’s easy to see why it can be intimidating picking the home loan that suits your situation when there’s so much choice! To help, here’s a rundown of the most common home loans:
Principal and interest loans
These are often standard, with borrowers making regular payments against the amount loaned, including interest charges, over a 25-30-year period.
Interest only loans
These require payments to cover the interest of the loan only. The actual amount you borrow will only reduce with extra payments.
Within both these loan products, there can be a variety of different interest rates, including:
- Variable interest – the rate can go up or down in line with cash value or lender terms.
- Fixed interest – interest will remain unchanged over a fixed time (usually 2-5 years).
- Split loan – this is a combination where part of your rate is variable, and part is fixed.
- Find a cheaper interest rate – shop around to find an interest rate on a home loan that seems within your means to pay off as soon as possible.
- Make larger or more regular repayments – this reduces the length of your debt. Be sure to check if any extra payments incur a transaction free.
- Plan for speed – the key to good financial health is planning. If you don’t think you can afford the repayments, you should speak to a financial specialist who can offer guidance on the next steps.
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