If you are between the ages of 35 and 50, chances are you have a mortgage. It is an important part of your financial picture, but it does not have to be overwhelming. Navigating your mortgage during these prime years can be both empowering and financially rewarding if you take the right approach.
UNDERSTANDING YOUR MORTGAGE
The first step in mastering your mortgage is understanding the terms of your loan – the interest rate, the type of rate (fixed or variable), the term, and any associated fees or penalties for early repayment. Knowledge is power, and understanding these basics is key.
2. CONSIDERING REFINANCING
The world of interest rates is ever-changing. If interest rates have fallen since you took out your mortgage, refinancing could save you a lot of money. But refinancing is not just about lower rates; it can also help you pay off your mortgage faster or free up cash for other investments.
3. EXTRA PAYMENTS: A LITTLE GOES A LONG WAY
Making extra mortgage payments can significantly reduce the amount of interest you pay over the life of the loan and shorten your payment term. Even small additional payments can add up over time.
4. BALANCING MORTGAGE WITH OTHER DEBTS
If you have other high-interest debts, such as credit cards or personal loans, it may be more advantageous to pay these off before making additional mortgage payments. It all comes down to prioritising your debts according to interest rates and financial impact.
5. UTILISING MORTGAGE OFFSET ACCOUNTS
Take advantage of any offset accounts that your mortgage may provide. Money in these accounts is used to offset the balance of your mortgage, lowering your interest payments while not committing to a longer repayment schedule.
6. EXPLORING MORTGAGE BREAK OPTIONS
Life can be unpredictable, and financial situations can change. Know your options for deferring mortgage payments if you ever need to, whether due to job loss, illness, or other major life events.
7. BE MORTGAGE-SAVVY WITH TAX
Learn how your mortgage affects your tax situation. There may be tax benefits associated with your mortgage for some people, particularly those who own investment properties.
8. SEEK PROFESSIONAL ADVICE
As a mortgage broker, we can be a valuable resource for you. We can provide tailored advice, assist you in understanding your options, and even assist you in obtaining a better mortgage deal.
9. PLAN FOR THE FUTURE
While you are focused on your current mortgage, do not forget to plan ahead. How will your financial situation look as you approach retirement? What role does your mortgage play in this picture?
10. CELEBRATE MILESTONES
Paying off your mortgage is a marathon, not a sprint. Celebrate the milestones, like reaching the halfway point or getting below a certain balance. It’s important to recognise and celebrate your financial achievements.
Managing your mortgage during your prime years requires a combination of strategy, knowledge, and foresight. You can transform your mortgage from a financial burden to a key component of your financial success by understanding your options and making informed decisions.
If you want to know whether your home loan is working effectively for you and your personal finances contact me at karen@harkenfinance.com for a chat.
