How an extra $60 per week on your home loan could save you 5 years and $258k in interest costs – By Pat Hoey
How an extra $60 per week on your home loan could save you 5 years and $258k in interest costs
A $600,000 loan over 30 years at current interest rates, is $869 in weekly payments (total repayments over 30 years would be $1.355M, with the interest being $755k). If you paid an extra $60 per week (so $929) your loan would drop to 25 years, and reduce the total interest costs to $607k, and save you interest of $148k (plus save you 5 years of loan repayments). So how much are you willing to commit extra per week to your home loan, to help reduce the loan years and interest costs? What could you stop buying to help commit to this?
What would a better interest rate do? On the above loan, if you could get a better interest rate of just 0.2% lower, this could save you $28k of interest over 30 years. Your loan repayments would drop from $869 to $851 – but you could keep it at the same rate, it would cut nearly 2 years off your loan, and $81k of interest costs.
Do you know what your current timeline is to pay off your home loan is? When was the last time you asked for a better interest rate?
By Pat Hoey