The general principle is to repay as much as you can as often as you can.
• Use windfall gains to make lump sum repayments (e.g. an inheritance, the sale of a second vehicle, an unused boat or caravan, etc).
• Have a coin tin. If you are collecting coins at a rate of $20 a month, use this to increase the repayments.
• Hold an annual garage sale. use the proceeds for a lump sum mortgage repayment.
• Work overseas for a spell. Rent the property out. Use your extra savings from a better paying job and the rental income to increase repayments.
• Take on a part-time job with all of that income going to mortgage repayment.
• Negotiate a lower interest rate and use the interest savings to increase the capital repayments.
• Use any one of the money making ideas suggested above to increase repayments.
• Break fees. About 80% of all housing loans are fixed rate mortgages. That means the interest rate is fixed for anywhere between 6 months and five years depending on the term. Because interest rates have fallen most homeowners have missed out on the falling interest rates, and would have to pay a “break fee” to the bank if they repay early. But one fine-print reading oily ragger has discovered that they were able to repayment up to $12,000 a year off their fixed rate loan without incurring break fees. The thing was they their mortgage was split into two fixed rate loans with different terms so they were able to repay $24,000 a year without getting stung with break fees. This is the way to go for those paying say 9.5% on a fixed rate loan and receiving 4% (less tax!) on savings in the bank. Ask your bank if they allow partial repayment of fixed rate loans without incurring a break fee.
– Oily Rag Ed’