A mortgage bond is a long-term commitment that can span between 20 – 30 years. Some home-owners might want to make changes to their future plans which would require an earlier finalization of payment on their mortgage bond.
This can be done in a number of ways, all of which can lower the repayment term significantly if you have the money to do so.
This is by far the easiest way to shorten your repayment duration. By increasing the size of your deposit, you in turn lessen the total amount owing and depending on the amount you are willing to pay on your monthly repayments, you can significantly shorten the total repayment period.
Increase Monthly Repayments
This can be done by renegotiating the repayment duration of your mortgage bond with the financial institution that is handling your home loan. By shortening the duration of your repayments, your monthly repayments will be recalculated at a higher rate.
Supplementing Monthly Repayments
If you find that you have more net surplus income than expected (e.g. certain regular payments fall away or you close an account), you could use this extra cash to supplement your monthly repayments, potentially shaving off years on your repayment period. Using a bond calculator tool can be useful in calculating your net surplus income, allowing you to make a more informed decision.
A Balloon Payment is another way in which you could secure a home loan with a shorter repayment period. Instead of paying the money upfront, as with a deposit, you will be expected to fulfil repayment on the amount owing once your monthly’s have been completed.
Refinance at a Lower Rate
If your home loan was setup initially with a fixed interest plan and the market has improved, you can refinance your home at the improved interest rate, but still pay the same rate as before. Not only will you save money in the long-term, but you will also be afforded the opportunity to shorten your repayment period by months or years.