For most of us, property debt is a fact of life. We can’t afford to buy homes or other properties outright, so we borrow money to finance them. This debt, of course, needs to be paid off.

So, how can you do this – and fast? Take a look at our five handy tips for paying off property debt faster.

Reduce the Principal with an Offset Account

Set up an offset account and pay into this on a regular basis. You can treat this account purely as savings, or you can withdraw money from it if you need to, but aim to keep adding to the account frequently. The offset account will help you reduce the amount of interest you need to pay on your loan, so you can get into paying off the principal faster.

Pay Off More Than You Need To and More Often

If you have the means to, pay off more than the minimum amount due each time you make a payment. This will help you make significant moves towards completely paying off the loan sooner. Also, make more frequent payments – basically, do what you can do bring that principal down ahead of schedules.

Speak to a Broker About Interest

You will always have to pay interest on your loan, but you may not have to pay such a high rate. Speak to your broker about potentially switching your mortgage or another loan to a more amenable rate. If you have been working with a particular lender for quite a while, they may be willing to offer you something better as a reward for your loyalty.

Prioritise Your Loans

This is a tricky one, as there is more than one school of thought here. Essentially, what you’re trying to do is decide which loans and repayments you need to clear first, and then make this your priority. However, actually deciding which loans should be cleared first can be difficult.

You may want to use the snowball method. This means paying off the loan with the smallest principal first – after all, this one should be the easiest to pay down. After you’ve paid off this one, take the payment you had dedicated for this loan, and use it to pay down the loan with the next lowest level of principal. Basically, you are basically ‘snowballing’ the momentum of your repayments.

There is another method that some may prefer, however. This is the avalanche method. With this method, you are targeting the loan with the highest interest rate first, and you are focusing your efforts on paying this off. Once this is paid off, take the amount you were using to pay down this loan and roll it into your payments on the next highest interest loan. Momentum is building once again, just in a different direction.

Speak to your broker about which method would work best for you. The idea is to grow your ability to pay down loan debts over time and to leave you feeling like you are making progress rather than just fighting fire after fire.

Consider Recasting or Refinancing

You might want to try refinancing your loan in order to reduce some of the principal you need to pay, but this can be an expensive and risky endeavour. Alternatively, recasting may work better for you if you have the means – paying off a lump sum of the mortgage and then recalibrating your interest rates and ongoing payments based on what’s left. Your broker can help you decide on which option is the best for your current circumstances.

Find the Right Loan with Sydney Brokers

Paying off your loan early is a great feeling, but having the right loan from the very beginning can be even more valuable. Choosing a loan that is a good fit for you, with interest rates and fee schedules that suit your financial situation, will save you money in the long term. Here at Sydney Brokers, we are committed to helping people find the loan products they need. Reach out today and let’s get started

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.