5 ways to shred thousands off your mortgage

The best thing about having a mortgage is the knowledge that, one day, you won’t anymore. That some time in the hopefully-not-too-distant future, every last cent of your home will be all paid off – from the tile at the top of the roof, to the underground foundations it’s sitting on.

At BNZ, we want to help you get there. So here are a few ways you can shred thousands off your home loan and be mortgage-free sooner:

  • Switch to fortnightly repayments
    If you currently pay off your mortgage monthly, you can hurry things along a little by changing to fortnightly payments. Because there are 12 months in a year, but 26 fortnights, you’ll end up making two extra repayments every year without even noticing. Let’s say you have a $200,000 mortgage over 25 years at 6% p.a. Your monthly repayments would be around $1290. If you switched to paying $645 a fortnight, you’ll pay off the loan in 21 years instead and save almost $35,000 in interest.

  • Don’t let lower interest rates affect your repayments
    It’s tempting to lower your repayments if interest rates drop, but if you stick with the same amount, more of each payment will go towards repaying principal. That means you’ll reduce your outstanding balance faster, and lower your overall interest costs.

  • Tailor your repayments with BNZ
    Whether you finally get that big pay rise, or the kids fly the nest at long last – over the years, your financial situation is bound to see a few changes. And increasing your repayments to suit your financial situation can make a huge difference to the total cost of your loan. With BNZ’s Tailored home loan, you’ll get a little reminder every year, giving you the option of a small automatic increase to your loan repayments. You can choose to take it, or leave it – it’s completely over to you! The tailored repayment option is available with all BNZ home loans, except Rapid Repay, Mortgage One, interest only and progressive drawdown loans, and it’s a great way to make sure you’re paying off your home loan as fast as you’re able.

  • Make extra repayments
    A big bulk of your monthly mortgage payments actually goes towards interest on the principal – so if you can reduce your principal, you can reduce your interest payments. And making extra repayments is a great way to reduce your principal balance. If you’re on a floating home loan, you can make extra repayments any time without any penalty. And if you’re on a BNZ fixed rate, most of our fixed products let you repay up to 5% of the original loan amount each year, without incurring any early repayment charges. You could put any financial windfalls – like pay bonuses, or tax refunds – into your mortgage. Or even make a deal with yourself to put any pay rises you earn towards paying off your mortgage!

  • Look into offsetting
    BNZ’sTotalMoney floating home loan is a great offset loan option. It combines the balances of your TotalMoney everyday accounts, and subtracts them from the total owing on your mortgage. That means you end up paying back less interest, and more of your original loan - and could save yourself thousands of dollars of interest, and get mortgage-free faster in the process. 

To find out how much you could shred off your home loan visit [shredmymortgage.co.nz

](http://www.shredmymortgage.co.nz/#/calculate)To find out more about whether any of the above options could be right for you, pop in to your local BNZ to find out how much you could shred off your home loan. And who knows – you could be popping that celebratory bottle of champagne sooner than you think! 

BNZ Lending criteria, terms and fees may apply. Early repayment charges may apply.

  • This article is intended as a general discussion only, and is based on selective information which may not be suitable for your purposes. BNZ strongly recommends the recipients take independent legal, investment and financial advice prior to making any investment decisions.