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  • Get home loan free faster
  • Tailored repayments
  • Reduce your interest by offsetting
  • Make payments fortnightly
  • Pay extra when you can
  • Keep payments same if rates go down
  • Reduce the term of your loan
  • Keep a portion of your loan on floating
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01 BUDGETING FOR HOME OWNERSHIP 2
Get home loan free faster

06 Tailored repayments
Tailored repayments

06 reduce your interest by offsetting
Reduce your interest by offsetting

06 Increase your payments to fortnightly
Make payments fortnightly

06 Pay extra when you can
Pay extra when you can

06 Keep payments same if rates go down
Keep payments same if rates go down

06 Reduce the term of your loan
Reduce the term of your loan

06 Keep a portion of your loan on floating
Keep a portion of your loan on floating

Get home loan free faster

At BNZ, we believe that a home loan isn’t for life. We know that big mortgages can be scary, but many homeowners are able to pay off their mortgages faster than the 25 or 30 years they’ve signed up for.

There are things you can do to make a difference to your mortgage. Every cent extra you pay now will multiply – even a few dollars a week adds up to thousands of dollars in savings on interest payments. If you can slash 10 or more years off your mortgage, you’ll feel empowered and have longer to save for retirement or you can use the extra money for that dream holiday.

Why it’s a good idea to pay it off early

You pay less interest: Monthly interest payments are based on the outstanding principal. The more you chip away at that principal the more your interest payments reduce. If you can do this your loan amount will be a lot lower down the track. It can save you a lot of pain.

You can build up equity: Another reason to make hay while the sun shines is to build up equity, which could allow you to buy a second home – maybe a bach, or an investment property. That way you’d be paying down the mortgages on two properties to build more equity in preparation for the property cycle turning back into investors’ favours.

It builds in a buffer: Circumstances can change. You or your partner might be made redundant, suffer an acute or long-term illness, or have to take time off work for parenting or caregiving. The worst-case scenario is that your spouse or partner dies suddenly and you can’t return to work because your children need you. It happens, and it’s a really good idea to be prepared. Too often Kiwis feel ten feet tall and bulletproof and a sudden drop in income catches them by surprise. If they’d been regularly overpaying the mortgage they would probably be able to go back to the minimum payments or even redraw the overpaid principal. It could give you leeway for six months or so and having insurance to pay off the loan should the worst happen, is something to seriously consider.

Now you know why you should pay off your home loan faster, here's how you can do it:

Tailored repayments

It’s easy to leave your repayments the same year after year. Instead, increase what you pay by a small percentage annually, and you can reduce your mortgage. It’s an easy way to direct your annual pay rises to paying down your mortgage. One or two percent is so small it’s often not even noticeable, but after a few years these annual increases add up to big money savings. It’s worth having a chat with your bank as early repayment fees may apply.

Another way to do the same thing is to increase payments each time your fixed interest loans roll over. 

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Tailored repayments

Save thousands of dollars in interest and pay off your home loan faster with tailored repayments.

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Goodbye Mortgage

Find out how you could save years and thousands on your mortgage. See what you could save now.

Tailored repayments

It’s easy to leave your repayments the same year after year. Instead, increase what you pay by a small percentage annually, and you can reduce your mortgage. It’s an easy way to direct your annual pay rises to paying down your mortgage. One or two percent is so small it’s often not even noticeable, but after a few years these annual increases add up to big money savings. It’s worth having a chat with your bank as early repayment fees may apply.

Another way to do the same thing is to increase payments each time your fixed interest loans roll over. 

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TotalMoney

You could shave years off your mortgage using the balances of your day-to-day TotalMoney accounts.

Reduce your interest by offsetting

An ‘offset’ mortgage account combines all the balances of your day-to-day accounts and quite literally offsets the total balance against your mortgage. When your salary is deposited, it effectively reduces your overall principal owing by that amount, meaning that you’re not paying mortgage interest on the equivalent amount of principal for the period of the month that you have the money in the account.

The clever thing with offsetting is that your day-to-day money and any short-term savings, such as your emergency fund, are in effect earning the same as the mortgage interest rate, rather than a smaller interest rate in a savings or current account.
Providing you have some money in your accounts for at least part of the month, you will benefit.

Reduce your interest by offsetting

An ‘offset’ mortgage account combines all the balances of your day-to-day accounts and quite literally offsets the total balance against your mortgage. When your salary is deposited, it effectively reduces your overall principal owing by that amount, meaning that you’re not paying mortgage interest on the equivalent amount of principal for the period of the month that you have the money in the account.

The clever thing with offsetting is that your day-to-day money and any short-term savings, such as your emergency fund, are in effect earning the same as the mortgage interest rate, rather than a smaller interest rate in a savings or current account.
Providing you have some money in your accounts for at least part of the month, you will benefit.

MAKE PAYMENTS FORTNIGHTLY

One clever trick that many Kiwis use is to pay their mortgages fortnightly, which cuts a few more thousand off the overall interest bill over the life of a mortgage.

With 26 fortnights in a year, you’ll make two extra payments annually, which adds up to sizeable savings. Just be careful when you set up your fortnightly payments that you’re paying half of your monthly amount each fortnight. If you divide the annual figure over the 26 payments, you won’t save. The trick is in making the extra payments.

For example, if you make fortnightly repayments of $250 rather than a monthly repayment of $500, you’ll make two extra payments a year and repay $500 off your loan. That’s because there are 12 months in every year, but 26 (not 24) fortnights.

01 INCREASE YOUR PAYMENTS TO FORTNIGHTLY
MAKE PAYMENTS FORTNIGHTLY

One clever trick that many Kiwis use is to pay their mortgages fortnightly, which cuts a few more thousand off the overall interest bill over the life of a mortgage.

With 26 fortnights in a year, you’ll make two extra payments annually, which adds up to sizeable savings. Just be careful when you set up your fortnightly payments that you’re paying half of your monthly amount each fortnight. If you divide the annual figure over the 26 payments, you won’t save. The trick is in making the extra payments.

For example, if you make fortnightly repayments of $250 rather than a monthly repayment of $500, you’ll make two extra payments a year and repay $500 off your loan. That’s because there are 12 months in every year, but 26 (not 24) fortnights.

01 INCREASE YOUR PAYMENTS TO FORTNIGHTLY
02 PAY EXTRA WHEN YOU CAN copy
PAY EXTRA WHEN YOU CAN

Sometimes we find ourselves with extra income or reduced expenses. Shifting those windfalls into the mortgage is a really effective way to pay down principal. Don’t treat bonuses, inheritances, and other lump sums as ‘found money’ to spend. If you can channel them into the home loan you could be mortgage-free much faster. Don’t forget, early repayment fees may apply, so it’s best to have a chat with your bank to find out more.

Anything you pay above the minimum amount will come straight off the principal of your home loan. e.g. on a 30-year, $300,000 home loan at 6% p.a., you’d save more than $140,000 in interest and pay your loan off at least 11 years sooner with tailored repayments, when compared to a standard table loan.

Rounding up your repayments is a quick win if you want to pay off just a little more each week/month. (For example, instead of $634, pay $650).

With variable mortgages on floating rates, you can usually pay as much as you want off your loan whenever you want, without incurring any fees.

02 PAY EXTRA WHEN YOU CAN copy
PAY EXTRA WHEN YOU CAN

Sometimes we find ourselves with extra income or reduced expenses. Shifting those windfalls into the mortgage is a really effective way to pay down principal. Don’t treat bonuses, inheritances, and other lump sums as ‘found money’ to spend. If you can channel them into the home loan you could be mortgage-free much faster. Don’t forget, early repayment fees may apply, so it’s best to have a chat with your bank to find out more.

Anything you pay above the minimum amount will come straight off the principal of your home loan. e.g. on a 30-year, $300,000 home loan at 6% p.a., you’d save more than $140,000 in interest and pay your loan off at least 11 years sooner with tailored repayments, when compared to a standard table loan.

Rounding up your repayments is a quick win if you want to pay off just a little more each week/month. (For example, instead of $634, pay $650).

With variable mortgages on floating rates, you can usually pay as much as you want off your loan whenever you want, without incurring any fees.

KEEPING PAYMENTS SAME IF RATES GO DOWN

When interest rates are low it’s tempting to bank the difference and spend it on luxury items. But there’s no rule that you have to spend 25 or 30 years paying off a mortgage, so if you want to get ahead financially, turn that thought around and view low interest rates as an opportunity to pay down your mortgage now and get debt free faster.

Keep your monthly repayments the same if you want to make savings. Think of it this way, when interest rates are low, more of your monthly payments go towards paying down the principal. As former United States president John F. Kennedy said: “The time to repair the roof is when the sun is shining”.

03 KEEPING PAYMENTS SAME IF RATES GO DOWN
KEEPING PAYMENTS SAME IF RATES GO DOWN

When interest rates are low it’s tempting to bank the difference and spend it on luxury items. But there’s no rule that you have to spend 25 or 30 years paying off a mortgage, so if you want to get ahead financially, turn that thought around and view low interest rates as an opportunity to pay down your mortgage now and get debt free faster.

Keep your monthly repayments the same if you want to make savings. Think of it this way, when interest rates are low, more of your monthly payments go towards paying down the principal. As former United States president John F. Kennedy said: “The time to repair the roof is when the sun is shining”.

03 KEEPING PAYMENTS SAME IF RATES GO DOWN
04 REDUCE THE TERM OF YOUR LOAN
REDUCE THE TERM OF YOUR LOAN

It’s not uncommon to feel like trading up or to want to extend your mortgage every few years to pay for cars, extensions, new bathrooms or just clearing credit card debt. If you keep extending the mortgage or simply put it on too long a term, you may not be able to retire when you want to.

Most people take out a 25 or 30-year mortgage but if you can find ways to reduce the term, which means slightly higher payments, you’ll become mortgage-free faster and pay less interest. Upping your payments without reducing the term has the same effect and gives you more flexibility should you need to drop down to the minimum payment of the longer mortgage term.

For example, If you reduce a 25 year, $500,000 loan to 20 years, your repayments will increase from $1,365 to $1,537. That’s only $172 extra a fortnight to pay off your loan, but you’ll pay it off five years earlier and save over $80,000 in interest. 

04 REDUCE THE TERM OF YOUR LOAN
REDUCE THE TERM OF YOUR LOAN

It’s not uncommon to feel like trading up or to want to extend your mortgage every few years to pay for cars, extensions, new bathrooms or just clearing credit card debt. If you keep extending the mortgage or simply put it on too long a term, you may not be able to retire when you want to.

Most people take out a 25 or 30-year mortgage but if you can find ways to reduce the term, which means slightly higher payments, you’ll become mortgage-free faster and pay less interest. Upping your payments without reducing the term has the same effect and gives you more flexibility should you need to drop down to the minimum payment of the longer mortgage term.

For example, If you reduce a 25 year, $500,000 loan to 20 years, your repayments will increase from $1,365 to $1,537. That’s only $172 extra a fortnight to pay off your loan, but you’ll pay it off five years earlier and save over $80,000 in interest. 

KEEP A PORTION OF YOUR LOAN ON FLOATING

If you have some of your home loan balance on a variable floating rate, you’ll have the flexibility to pay this portion off faster because you can make extra payments at any time, without being penalised. 

05 KEEP A PORTION OF YOUR LOAN ON FLOATING
KEEP A PORTION OF YOUR LOAN ON FLOATING

If you have some of your home loan balance on a variable floating rate, you’ll have the flexibility to pay this portion off faster because you can make extra payments at any time, without being penalised. 

05 KEEP A PORTION OF YOUR LOAN ON FLOATING

Reach your goal with this checklist

Use this list to make sure you’re doing all you can to be home loan free faster.

Your deposit

Home loan application

Finding a home

Buying a home

Settling

Get home loan free faster

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