Pay Off Your Mortgage Faster: Simple Steps to Save Thousands

Navigating the journey of homeownership can feel like a long road, but what if you could reach the finish line sooner? Paying off your mortgage faster is actually as simple as it sounds, and it can save you thousands in interest over the life of your loan. It’s all about making small, consistent changes that add up to a significant impact.

Simple Steps to Accelerate Your Mortgage

1. Increase Your Repayments Even a small increase in your regular mortgage payments can dramatically shorten your loan term. You can round up your payment, or if your financial situation allows, increase it by a larger amount. However, it's important to note that different banks in New Zealand allow different degrees of flexibility around how much you can increase your repayments by within a fixed-rate term without incurring a penalty. Some banks, for example, allow you to pay off up to an extra 5% of your loan balance each year, or increase your regular repayments by a certain amount per week or month. Always check your loan agreement or check in with your adviser and we’d be happy to help you understand your specific limits.

2. Make Lump-Sum Payments If you receive a bonus from work, a tax refund, or an inheritance, consider putting that extra cash toward your mortgage. These lump-sum payments act like a powerful boost, chipping away at the principal and significantly reducing the amount of interest you'll pay in the long run.

3. Switch to a More Frequent Repayment Schedule Instead of making one large monthly payment, consider switching to bi-weekly or weekly payments. By paying half of your monthly payment every two weeks, you'll effectively make one extra full payment per year, without even feeling the pinch in your budget.

4. Keep Your Repayments the Same After a Rate Drop When your fixed-rate mortgage term ends and you roll onto a new, lower interest rate, if budget allows resist the temptation to lower your repayments. By keeping your repayments at the same level you were paying at the higher rate, you ensure that the extra money that was once covering a higher interest cost now goes directly toward paying down your principal. This is an effortless way to accelerate your progress without changing your budget.

See the Impact for Yourself

Want to see how these small changes can make a big difference? You can have a play with the handy extra repayment calculator on our website, click here. This tool demonstrates the power of accelerating your mortgage payments, showing how extra payments can shorten your loan term and save you thousands of dollars in interest.

By being strategic with your mortgage payments, you're not just paying off a debt—you're building equity in your home faster and securing your financial future.

Want to get started? While the principles are simple, navigating the details can be complex. Each bank has different policies on how much you can increase your repayments and when you can make lump-sum payments without penalty. For specific, tailored advice and to help you navigate your bank’s unique policies, contact us today.