Aggressive repayment of your home loan: What are the benefits?

By the resi financial blog team, 04 September 2013

How do I reduce my home loan

Even if you have the cheapest fixed rate home loan possible, there are a number of benefits to getting proactive and aggressive about making repayments.

There are a lot of different ways to speed up your repayments, which can be good for a number of reasons outside of simply getting you out of debt faster.  By making lump sum payments, or increasing the regularity or amount of your repayments, you can shave years off your overall loan period.

However, the best reason to try and get debt free faster is to reduce the overall amount of interest you'll be paying on your home loan. 

Interest is calculated daily, so the faster you reduce your overall home loan amount, the faster your interest repayments will drop as well - helping you to save both time and money heading into the future.

Furthermore, by making aggressive repayments you'll also be paying back your home loan principal. What this equates to is a faster accumulation of home loan equity, which can then be utilised for future projects.

Your equity is the difference between the value of your home and the amount you still owe on your mortgage. By speaking with a financial professional, it can be possible to access this through a line of credit for your own use. 

Whether you invest in more property, purchase a new car or simply take a well-deserved holiday, increasing your equity as fast as possible is a fantastic reason to give aggressive repayments a chance.

Paying off your home loan as fast as possible isn't simply about getting debt-free. Regardless of whether you have a fixed or variable home loan, there are a number of benefits, both present and future, that can come from knuckling down and putting any spare money you have towards paying off your home loan.

Categories: Home Loans, Personal Finance