12 Strategies To Pay Off Your Loan Faster !

This week I will continue part 2 of how to pay your loan faster. There are hundreds of ways to pay down your loan faster, here are some of the ideas that I believe most people can do.

1. Make extra repayments
a. This can be paying interest in advance, for a month, six months or 1 yr ahead
b. Pay extra whenever you can eg bonus time, commissions or profit sharing
c. Make repayment more regularly eg change repayment from monthly to fortnightly or even weekly
d. Cut back on some expenditures eg big furniture items or small as one cup of a coffee a day can save you $100 a month, this can save a lot of interest
2. Find a cheaper interest rate product and pay only the features you will benefit from. Eg a basic home loan with no fees vs professional package loans.
3. Look for loans that offer features without a charge, eg redraw fee, extra repayment....etc you can save if you know you are likely to use this kind of feature and find a loan that doesn’t charge it. We know some banks would charge anywhere from $25 to $50 per redraw!
4. Pay your salary payment directly to your loan account
5. Use 55 days credit card for your day to day spending
6. Set up a 100% offset account, especially for time poor people, this will save them monitoring the balance in the saving account and transfer extra fund to the loan account.
7. Keep the same repayment amount when interest rate goes down.
8. Review your loan more often
9. Close any saving accounts or high interest deposit account which are earning small interest and you need to pay tax on the earning
10. Make use of internet banking
11. Pay extra funds on fix rate loan (if it allows you to do so without being charged a penalty) or have a split variable rate and fix rate loan
12. Use your free equity to invest in higher earning investments over long term eg rather than keep paying off one home loan you may be able to buy another investment property and over long term the capital gain on that property will outweigh the interest rate. However to do this you must first understand the risk and get a proper financial advice.

I did not go into each point in detail, however please email me if you need further explanation.