If you’re like most Australians, you had to take out a sizable loan when you first purchased your home, and now you’re slated to spend decades of your life paying that money back. Needless to say, it can be stressful going through life with that heavy financial burden hanging over your head.
For this reason, many people feel a sense of pressure to start paying off that debt faster. This can be tough to do, as the average Australian spends a massive chunk of their take-home pay each month making loan repayments, and there’s usually not much room to pay extra. Having said that, there are benefits to doing so.
How you can benefit from paying extra
If you’ve borrowed a sizable amount of money in your past, even with the use of low doc home loans, it can be difficult to pay it all off because of the sizable interest rates that compound your debts. The Australian Securities and Investments Commission advises that making extra payments now can help you avoid paying excessive interest later.
In certain situations, you have to balance multiple debts that both have considerable interest rates, such as a home loan and a credit card. In these situations, you may have to crunch some numbers to identify which debt is more important to pay down first.
Tips and tricks for beating the interest rates
For Australians with all sorts of debts to pay off, including self-employed home loans, it can be difficult to recoup all the equity you’re losing from fighting against rising interest rates. There are some ways to fight back, though. For example, Your Mortgage Australia advises using a savings account to accrue interest of your own, which can cancel out the money you’re losing to debt repayments.
In addition, whenever you come across any lumps of cash, such as a refund from your taxes or a bonus at work, you can use that money to make an extra payment and get ahead. Every little bit helps against mounting interest.
Let us help you crunch the numbers
At Redrock, we pride ourselves in helping our customers find solutions to debt challenges. Whether your financial history is pristine or you’re in need of bad credit home loans, we’ll find a loan that works for you either way.
We have a team of experts who can analyse your situation, plus a handy loan repayment calculator that will help you map out your financial framework. With the resources we have on hand, you should have no trouble planning for a debt-free future.