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Repayment tips to make the most of your mortgage

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Mortgage-repayment-tips-for-your-home-loan

Congratulations! You’ve taken the plunge and bought your first property.

Home-ownership is often thought to be the cornerstone of the ‘Great Aussie Dream’. With this great achievement comes great responsibility to meet the terms of the mortgage you agreed to. That’s easy to do if you keep on top of things! Consider these three mortgage repayment tips to help you do just that.

MORTGAGE REPAYMENT TIP 1: Consider renting your property

In Australia, if you have an investment property that you rent out, you may be eligible for tax benefits that are not available to owner-occupiers.

For starters, interest costs on an investment property are often tax deductible. Furthermore, other costs associated with an investment property are often deductible as well, such as property management fees, strata levies, maintenance, council and water rates.

If the sum of all these expenses is greater than the rental income earned from the investment property, the difference can often be deducted from your taxable income. This is known as negative gearing.

MORTGAGE REPAYMENT TIP 2: Make Fortnightly Repayments

Everyone knows there are 12 months in a year.

But have you ever stopped to consider there are 26 fortnights in a year?

26 fortnightly repayments are equivalent to making 13 monthly repayments to your mortgage each year.

By simply paying one half of your monthly mortgage repayment every second week, you’ll end up paying an additional monthly instalment each year.

While this may not sound like much, it can quickly add up.

By simply changing from monthly to fortnightly, you could reduce your mortgage repayments while also shortening your loan term – thereby owning your home outright sooner.

MORTGAGE REPAYMENT TIP 3: Get a 100% Mortgage Offset Account

Many people have heard of the mortgage offset account but are unsure exactly how it works.

A mortgage offset account is basically a savings account that's attached to your home loan.

Just like a regular savings account, you can generally make deposits and withdrawals whenever you wish.

However, the main advantage of a mortgage offset account is that it effectively reduces your home loan balance (for interest calculation purposes) by the amount in your offset account.

 

  • You have a $450,000 mortgage
  • You have $20,000 in your mortgage offset account
  • The interest for your mortgage will be calculated on $430,000, instead of $450,000

Managing your finances is easy with a mortgage offset account and they are a great way to keep savings at hand while still minimising your interest payments.

If your financial circumstances change and you need to access funds quickly, you can dip into the money that has been offsetting your mortgage.

At Qudos Bank, our award winning Low Cost Home Loan (Value Package) offers you a 100% offset account and lots of other financial benefits and discounts on other lending products.

How can we help?

Contact us today on 1300 747 747 or visit qudosbank.com.au to find out more about our great range of home loan products.

 

  Disclaimer

Qudos Mutual Limited trading as Qudos Bank ABN 53 087 650 557 AFSL/Australian Credit Licence 238 305. The information in this article is of a general nature and has been prepared without considering your objectives, financial situation or needs. Before acting on the information, consider its appropriateness to your circumstances.

 

Article published March 2019