Tips for effectively managing your mortgage
Managing your mortgage effectively is one of the best ways to help avoid mortgage stress. Below are our top tips:
1. Try and pay more than the minimum
To understand why paying above the minimum repayments is so effective in managing your mortgage, it helps to recognise that at the beginning of the loan term payments are paying mostly interest. There is very minimal reduction to the principal of the loan (amount borrowed). However, any additional amounts pay down the principal directly – reducing the overall life of the loan, and the total interest payable. Win, win!
2. Have all your direct debits come out on the same day
Multiple direct debits, with varying dates across the month can be difficult to track. Coordinating all your direct debits to come out of your account on the same day can help avoid your transaction being declined or account being overdrawn. So, check your scheduled transactions in your internet banking and adjust the dates, or, for externally managed payments, you can contact the creditor/supplier and request a change of direct debit date.
3. Stay informed of the current financial climate and rate changes
Keeping up-to-date with what’s going on in the world of finance and real estate can help you make proactive decisions. You can look at rate information via the RBA, or join our mailing list for a monthly update.
4. Check your mortgage account frequently and make sure all activity is normal
Like with any account, monitoring the transactions for anything out of the ordinary is an important part of managing your mortgage. Unfortunately, mistakes are sometimes made, so the sooner you pick them up and raise them with your financial institution, the better.
5. Ensure there are no overdraws
No one likes it when their account is overdrawn, or when transactions are declined. Stay ahead of your account and actively monitor it to ensure that your payments can be made on time, and without any overdraws.
6. Don’t live out of your mortgage account – have a separate bank account purely for your home loan direct debit
One of the best ways you can ensure your mortgage payments are always available and paid on time is to dedicate a separate account for your mortgage amounts to wait until payment is made. This will ensure you have the funds available, and remove any temptation to touch them in the meantime.
A note regarding mortgage stress
If you are already experiencing mortgage stress and are not sure if the above tips will help you, why not come and have a chat? We’d love to look at your options with you to see how this could be addressed to make managing your mortgage easier moving forward. Contact us here or call 03 8657 8664 and let’s make time to connect.