Don’t lower your mortgage repayments
With lenders dropping their interest rates in recent weeks, the temptation to loosen the belt and lower repayments is high. But according to the Mortgage and Finance Association of Australia (MFAA) every dollar households can contribute goes a long way. "People have been stretched to maintain their mortgage repayments in recent months and often the first reaction at a rate drop will be to spend that saving elsewhere," says Phil Naylor, CEO of the MFAA. "However, if you're able to keep repayments up above the minimum instalments then it could potentially shave years off the end of your loan." Any extra one-off repayment like a tax return can also provide a healthy boost to a loan balance, and minimise the overall interest, says Mr Naylor. "You can't escape interest, but you can minimise its impact with the occasional lump sum payment. Instead of hitting the weekend sales with your tax return, consider making an extra mortgage repayment." "Understanding the structure of your mortgage is the key to paying it off sooner."