Mortgage stress? Four ways to pay off your mortgage faster
Extended lockdowns and rising interest rates have resulted in mortgage stress for many Kiwis. Unlike last year’s lockdown, the government hasn’t introduced a mortgage deferral scheme this time around. If you are struggling to pay your mortgage, then talk to your Loan Market adviser. They can provide the expert help and advice you need.
Here we share four general tips on how to reduce mortgage stress and become mortgage-free faster.
1. Refix your loan
If your fixed-rate home loan is due to end, then you have two options available. You can switch to a variable rate or refix your home loan with a new mortgage. With interest rates set to rise, refixing may be the best option.
Fixing some or part of your loan now will cushion you from any future interest rate rises. It also means your repayments will stay the same for a set time, providing some much-needed certainty in these uncertain times.
Loan Market works with an extensive panel of over 20 lenders and can help you access the best rates on the market.
2. Take advantage of cashbacks
Some lenders offer a cashback to new customers. Often these incentives can add up to several thousand dollars. However, they usually come with strings attached. Typically, you will have to repay the cashback if you sell, refinance or move to a new lender during a set time, usually three years. Try and resist the urge to spend your windfall. Instead, put the cash injection towards your mortgage, and stay on track to becoming mortgage-free faster.
3. Debt consolidation
Do you have other debts such as car loans, personal loans or credit cards? With debt consolidation, you combine all your high-interest debts into a single mortgage with one lender. Lower interest mortgage rates mean debt consolidation can improve your overall finances. Even a small decrease in interest rates on these expensive loans can save you thousands of dollars. That’s extra money in your pocket to help pay off your mortgage faster.
4. Set a budget
It’s never too late to take control of your finances by setting yourself a budget. Track your spending in a written record or use an online tool like Loan Market’s budget planner. This simple step can help you identify unnecessary expenditure and make savings.
There’s no escaping some bills. However, often we don’t realise how much we are spending on luxuries like takeaways and barista coffees.
You may be able to find some extra dollars to put towards your mortgage. Over time, these extra repayments could save thousands in monthly repayments and take years off your loan.
Experiencing mortgage stress? Contact your Loan Market adviser today for expert help and advice.