One of the most common misconceptions among Kiwis is that a 30-year mortgage is the only option for homeownership and that interest rates are the primary driver for reducing the term of your home loan. But at NZHL, we do things differently. In fact, it’s not unusual for NZHL clients to pay off their mortgage years faster than with a standard bank mortgage. How is this possible, you may ask?
In a nutshell, it’s all about getting expert advice to help you understand your financial goals (over and above paying off your loan), your options and guide you through structuring your loan to make the best long-term use of your money. We’ve laid it all out below, so you know exactly what NZHL does to help you pay off your mortgage faster.
Build your support network
Whether it’s the gym, sports, business, or other areas of life, most people perform better with the help of a coach or personalised support. It’s no different when it comes to money management and mortgages. Enlisting the help of an NZHL Mortgage Mentor is a key strategy to paying off your home loan faster.
Your Mentor will work with you to tailor a financial plan and mortgage structure to suit your needs and then provide ongoing support and guidance for the entire duration of your home loan. Yes, that means regular reviews and check-ins to help you stay on track. We believe that no home loan should be a matter of “set and forget”!
Evaluate your mortgage structure
Optimising your mortgage structure is key. NZHL’s smart home loan structure uses your income (offsetting)to reduce the interest you pay, which can drastically decrease the lifespan of your home loan. Your Mortgage Mentor will help you understand and set up this structure, selecting the most suitable loan term and interest rate options tailored to your circumstances.
Refinance your loan
If your current mortgage isn’t serving you well, refinancing could be the solution. Refinancing can offer many benefits, especially if your financial situation has changed. Working with an NZHL Mortgage Mentor can take the complexity out of refinancing by helping you through the process and potentially saving you money and reducing your loan term. Learn more about refinancing here.
Increase Income, Decrease Expenses
It goes without saying that increasing your income and cutting down expenses can help you pay off your mortgage faster. Even small financial gains can make a significant difference over time.
Some ways to decrease your expenses could include: cancelling unused subscriptions, reducing your monthly entertainment allowance (e.g., movies and restaurant dinners), or cooking more meals at home. To increase your income, perhaps it’s time to request your annual pay review or consider starting a side hustle in your spare time.
Offset your mortgage
NZHL’s smart home loan structure is designed to help you use your savings to reduce the interest you pay, which can significantly shorten the length of your home loan. At NZHL, we highly recommend talking to a Mortgage Mentor about making your money work harder for you!
Consider your options
While interest rates are important, and lower rates can impact short-term interest costs, the most influential factors in supporting financial well-being are the loan structure and personalised advice.
Let’s say your mortgage is up for renewal, and interest rates have decreased since you last fixed your rates.
While that may sound exciting, the best thing to do is get advice.
With the right financial advice, some homeowners may opt to use their left-over income (after bills and expenses) against their home loan help reduce their overall interest costs. While some clients may opt to continue with the same repayment amount (or increase it) even if their interest costs are lower – to pay off their loan faster and give good flexibility for the future.
That’s why it’s important to get personalised advice tailored to your unique circumstances – your NZHL Mortgage Mentor will work through the options with you to ensure your home loan plan supports your goals.
Make voluntary repayments
Depending on your lender and loan structure, you may be able to make a voluntary one-off lump sum payment. This reduces the principal and helps lower the amount of interest you pay overtime, significantly shortening the length of your home loan.
If you’ve received an inheritance, an end-of-year bonus, side-hustle income, or just accumulated a large amount of savings, making a lump sum payment is a great way to pay off your mortgage faster. The best part? Your NZHL Mortgage Mentor is with you every step of the way so they can help you decide if this is the best option for you and guide you through the process ensuring it’s smooth and hassle-free.
Get a plan and stick to It
You can have a smart home loan structure, a personalised financial plan, and a diligent NZHL Mortgage Mentor by your side, but if you blow your budget every week and don’t stick to the plan, it’s just not going to work!
NZHL believes in putting clients in control of their financial freedom, that’s why we offer all our clients access to DebtNav, a unique online financial planning tool that helps you plan, monitor, and review your progress towards financial freedom.
Ready to take the next step?
If you’re ready to get into your first home or refinance an existing loan, talk to an NZHL Mortgage Mentor. A free 1-hour appointment can provide insights into your current situation and goals, helping tailor a solution to reduce your loan term and achieve financial freedom faster. Book a chat here.
