How to pay off your home loan quicker
There are three main methods to repay your loan quicker than the term that bank will offer you:
1. Pay off higher loan repayment instalments regularly
The simplest way of paying off your loan quickly is to make regular loan repayments which are higher than standard 30 year loan repayments you make, so each loan repayment reduces your borrowed loan amount quicker.
2. Pay a set amount of loan upon loan maturity
Setting higher loan repayment instalments than normal may not suit you if you have other expenses or outgoing commitments which may require attention in future and therefore calls for you to save money. In this scenario, you can pay normal loan instalments for the fixed period of the loan but pay a set amount of loan back from your savings when the fixed loan comes to expiry thus reducing your borrowed loan amount quicker
3. Save interest repayments using offset account and direct it towards principal repayment
These days all banks offer you to setup part of your loan in an account where interest is only charged on outstanding balance of that account and if there is any money or savings available in that account no interest is charged on the available money. This is called an offset account and you can either direct your savings in this loan account or link this loan account to a number of separate savings accounts. By doing this, you only pay interest on a smaller portion of the loan and the savings in interest repayment can be used to pay off the loan and reduce it quickly.