You Can Save Much by Paying Extra Off The Loan

You can pay extra off your loan if you have enough money on hand. As long as it’s a variable rate loan, virtually all banks allow you to pay off as much as you like in extra repayments. With fixed rate loans the situation varies between banks. Splitting your loan to half variable and half fixed overcomes the problem if you want pay extra and still have the security of a fixed rate loan.

You can potentially save very large amounts in interest cost by paying the loan off more frequently and by paying off extra amounts. Setting your loan up with an offset account also can be a way to pay your loan off more quickly because any funds placed within this account is effectively equivalent to paying principle off your loan.

Whether you can link an offset account with the loan depends on the actual loan. There is no set rule but most standard variable rate loans and honeymoon rate loans will allow them but most discount variable rate loans won't. They are useful to have because they save on interest and are convenient however there are other ways to set your loan up to do the exact same thing.

Mortgage insurance covers the bank in case you default on your loan repayments. It does not cover you - the borrower. As a general rule, the banks require you to pay for this if the loan amount you are requesting is greater than 80% of the purchase price.

Click to find more on Loan Rate and Mortgage Insurance