Latest News Items
Most of us when we save to purchase a home do not have the capacity of paying the home loan off in one lump sum payment, which is why most mortgagees have had their home loans apportioned over 10 to 30 years. This helps stagger the cost over a more adequate time frame and hence minimise repayments.
Scheduling Home loan repayments wisely
As a borrower, one of the important requirements in selecting a home-loan repayment schedule is that repayments are structured in a manner that they will not place too much financial stress on your budget. Believe it or not, many borrowers set themselves up with excessive repayment schedules which may result loan repayment defaults.
It is wise to avoid financial strain impinging your quality of life and always prudent to be conservative on repayments when entering into a home loan mortgage. If you are uncertain how much you can commit to future repayments, you may want to use this budget planner calculator to consider the size of repayments you can afford. You can also gauge the size of your repayments, by using this loan repayments calculator.
Mortgage refinancing help and information is available at the MortgageRefinancing.com.au blog.
Be Wary of Compound Interest when making mortgage repayments!
One of the key factors that will contribute to the size of a loan is compound interest, which as many borrowers will attest can become a bane in situations where it has been allowed to snowball into larger and larger payments.
Compound Interest is interest that is calculated on both the balance and interest portions, which results in it increasing far more rapidly than Simple Interest (which only accrues interest on the principal amount).
Extra repayments will reduce the effect of Compound Interest
Compound interest acts in a manner similar to a weed spreading across a property, as it rapidly accumulates in new locations, which is why it is prudent to curtail its growth if possible. One way of doing this is to commit extra repayments, which will reduce the impact of compound interest. For an example of just how much can be saved with extra payments, you may find the extra payments calculator a helpful tool in showing the overall impact of extra repayments, which can reduce both the span and cost of your home-loan.
