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A non-major lender has revealed new modelling that shows how Australians with a moderate mortgage can save up to $47,000 in interest payments.
Second-tier lender AMP has found than an additional $50 a week in additional mortgage repayments save about $46,992 in interest paid over the life of a $400,000 mortgage.
For a $300,000 loan, an additional $50 per week in repayments would save about $44,150 in interest payments. For a $500,000 loan, that same $50 would save $48,887 in an interest bill over the life of the loan.
According to AMP Bank CEO Sally Bruce, many Australian investors don’t consider the significant impact additional repayments can make across the life of their mortgage.
“With recent cuts to variable mortgage rates, home loan customers have a choice to make around whether to pocket the rate cut or save the extra money, or a portion of it, back into their home loan,” said Ms Bruce.
However, Ms Bruce acknowledged that $50 per week, totally about $200 a month, is not necessarily manageable for all borrowers.
“We know no two home loan customers are the same. We encourage anyone with a mortgage to consider their personal financial circumstances before deciding whether making extra repayments is right for them,” said Ms Bruce.
Interest is the amount of money charged by a lender or financial institution for a loan, which is calculated as the percentage of the principal amount paid over the loan term.
Mortgages are loans that are used to buy homes and other real estate where the property itself serves as collateral for the loan.
Mortgages are loans that are used to buy homes and other real estates where the property itself serves as collateral for the loan.