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Extra Home Loan Repayments, What You Need To Know

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Did you know that making extra repayments on your home loan is a brilliant financial strategy?
You might want to use your extra cash for emergency events in your life. This can also save you tons of money in interest on your home loan in the long run. However, you must ensure that these extra repayments are carefully planned and that you have the right type of loan to allow it.

Fact is, every reduction in your loan’s principal balance will reduce the interest paid for every weekly or monthly loan repayment.

Why Do We Recommend Extra Home Loan Repayments?

In most cases, borrowers will have higher earning potential throughout the years. They now have the option to pay more off from their loans because of an increased cash flow and budgeting.

Having said that, you have to carefully consider what type of loan is best for your needs, especially if you plan to make extra repayments. Remember, not all loans offer this. Thus, we recommend talking to an Excellence Finance expert so you’d know what to do.

What Are the Best Types of Home Loans to Make Extra Repayments?

As a rule of thumb, almost every basic variable or variable-rate product will allow you to make extra repayments. While there are fixed-rate loans allowing extra repayments, there can be a handful of restrictions. Watch out for these!

Always ensure that extra repayments are embedded into your home loan structure so you can pay more than your monthly minimum. Doing so can help you avoid break fees. You can always speak with your finance broker to further evaluate your chosen loan product and to understand if your goals are achievable.

Is Your Chosen Home Loan Best For Your Needs
It is overwhelming to choose a home loan, and your decision must consider your current liabilities. For example, if you have other debts with higher interest, it’s more logical that you pay that first. Additionally, you might wish to completely pay your separate debt to have better cash flow.
These are a must-thought because a variable rate home loan can cost you more if you don’t make extra repayments caused by other financial obligations.

If you wish to learn more, reach out to us to enable us to help you.

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