Paying off your mortgage sooner will help you save plenty. However, with cost-of-living pressures and rising interest rates, it can be hard to find extra cash to add to your repayments.
But if your series of small changes applied consistently over time, it could put you on track to reach your goal sooner.
Here are 8 tips to help boost your savings.
Tip 1: Make a plan you can stick to
Rather than making extreme changes to your lifestyle and spending habits, focus on a range of savings strategies that will be sustainable. Consider canceling those streaming subscriptions you’re not using, learn how to cook your favorite meals at home, or opt for a second-hand or DIY option rather than buying brand new.
Tip 2: Automate and separate
By automating your savings and extra mortgage repayments, you move the money to where it needs to go before you have a lapse in willpower and spend it. Transferring your savings to an offset account may also help you save on interest charges.
Tip 3: Get a home loan health check
Reviewing the terms of your home loan every two years may help you find ways to save on fees or loan features you don’t need. We can carry out a loan health check for you and help you weigh up your options.
Tip 4: Create a budget and check your progress regularly
Tracking what you actually spend is the only way to get an accurate picture of your finances. Create a spreadsheet or use a budgeting app to categorise your spending and identify where you can cut back to meet your savings goal. Keep an eye on your progress each week to stay motivated and reinforce good habits.
Tip 5: Find extra income streams
Realistically, there is only so much you can save. Another way to boost your savings and make extra repayments is to establish an additional income stream. This could be a side hustle to your 9 to 5, taking advantage of unused assets or selling some of the unused things sitting around the house.
Tip 6: Be more conscious of what you spend on
There are so many ways to spend less without feeling like a scrooge. Instead of going on a holiday overseas, you can travel within Australia and explore local places. Pay for your purchases with cash instead of charging it on your credit card and being charged a massive bill at the end of each month. Skip a day at the spa for treatments you can do at home. Instead of paying for a gym membership, you can do your exercise in your local parks or around your neighbourhood.
Tip 7: Make lump sum payments
When you receive your tax refund at the end of the financial year or when you receive a bonus from your company, put those cash surplus into your home loan or your offset account. Practice delayed gratification. Don’t go rushing to the mall to buy a new bag or shoes. Remind yourself that additional lump sum payments can affect your total home loan repayments and the time it will take to own your property outright.
Tip 8: Consider paying your mortgage weekly
It may not make much of a difference, but changing your mortgage repayments from monthly to weekly may positively impact you over time. Because your interest accrues daily, this simple switch could potentially save on your home loan.
Ready to kickstart your savings plan and boost your mortgage repayments? Contact us for professional advice about saving on your mortgage.
Maria Papa is a senior property and finance expert specialising in home loans, investment loans, self-employed loans, alt doc loans, car loans, personal loans, and loan protection. She has offices in Sydney, Melbourne, and Manila. If you have questions, you can call Maria at 0430 144 008 or email her at mpapa@maverickfinance.com.au.
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