Are there any benefits to making additional repayments on your home loan?

As life gets more and more expensive, it can be hard enough making ends meet let alone considering making additional repayments on your home loan.

Let’s face it – it feels like could the money be put to better use than on a home loan where you’re already making the required repayments?

Well, whilst it may seem to be an unnecessary cost, there are quite a few benefits in the long term when making additional mortgage repayments.

1. Reduced interest payments: By making extra repayments, you can reduce the outstanding balance on your mortgage, which in turn reduces the amount of interest you have to pay over the life of the loan. This can potentially save you thousands of dollars in interest payments.
2. Shorter loan term: Making additional repayments can help you pay off your mortgage faster. By reducing the principal balance, you are effectively shortening the term of your loan. This means you can become debt-free sooner and potentially save years of mortgage payments.
3. Increased equity: Paying off your mortgage faster means you build equity in your home quicker. Having more equity can provide financial security and flexibility, such as the ability to borrow against your home or sell it at a higher price.
4. Lower risk: Paying down your mortgage faster reduces your overall debt. This can be beneficial in times of financial uncertainty or if interest rates rise. Having a smaller outstanding balance on your mortgage decreases the risk of defaulting on the loan and provides a greater sense of financial stability.

It is important to check with a dedicated mortgage broker who can help you understand any specific terms or conditions related to additional repayments, as some lenders may impose fees or restrictions on early repayments.

Get in touch today if you’d like to learn how to pay off your home loan sooner.