See following for tips on how you can achieve this.
Extra repayments
One of the best and probably most obvious ways is to make extra repayments. You may want to do this by depositing lump sums such as a work bonus or utilising your tax return. You can also make regular smaller cash injections which will also have a great impact on reducing the balance of the loan.
Let’s look at an example of what this might look like. If you paid an additional $50 a fortnight on a $500,000 loan you would save approximately $32,000 of interest over the life of the loan. You would also look to shave two years off the term of the loan.
Change your payment schedule
Some people may not have the discipline to make extra repayments, so another way to help save money and time on your loan is to switch your repayment schedule. There are 12 months in a year, but there are 13 four-week cycles so by switching your payment schedule from monthly to say fortnightly you are essentially paying an additional month off per year.
Ensure you have the right type of loan
If you want to make extra repayments, ensure your loan type does not charge a penalty. There are also some loan types that allow you to have an offset account linked to it which uses your savings to reduce your principle.
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