Can I borrow more on a fixed term mortgage? Yes you can. The interest rate will be based on the available rates on offer at the time of application and may be different from your existing borrowing which could put you on two different rates.
You can make up to $10,000 in additional repayments per fixed-term year, except for Interest in Advance loans. Your fixed-term year starts from the date that your Fixed Rate period began, and renews on the same date each year, until your fixed term ends.
Paying a little extra towards your mortgage can go a long way. Making your normal monthly payments will pay down, or amortize, your loan. However, if it fits within your budget, paying extra toward your principal can be a great way to lessen the time it takes to repay your loans and the amount of interest you'll pay.
Even if you need a larger mortgage amount for your new home, and want to keep your lower rate, you can blend an existing fixed rate mortgage with new funds at the current rate to get a better overall rate. You may avoid prepayment charges that are applied when breaking a closed mortgage early.
For most fixed or floating (variable) home loans, you can increase your repayments at any time. This means you're paying off more principal with every payment, so you will pay less interest overall and pay your loan off sooner. If your loan is on a fixed interest rate, early repayment charges may apply.
You can't prepay, renegotiate or refinance a closed mortgage before the end of the term without a prepayment charge. But, most closed mortgages have certain prepayment privileges, such as the right to prepay 10% to 20% of the original principal amount each year, without a prepayment charge.
If your home has increased in value since you bought it, you could borrow a further advance from your mortgage lender. There are reasons why this might be a good idea, but you should find out what it could mean for your repayments.
The additional amount will reduce the principal on your mortgage, as well as the total amount of interest you will pay, and the number of payments.
You can borrow more money by remortgaging your property with your current lender. The additional amount you can borrow depends on your income, existing mortgage balance, and property value. Discuss your options and eligibility for additional borrowing with your current mortgage provider.
Generally speaking, overpaying your mortgage is always a good idea. When inflation is high, paying more towards your mortgage means the higher rate of interest is applied to a smaller debt, therefore making it more affordable overall.
No matter how many principal-only payments you make on a fixed-rate mortgage, your monthly payment stays the same unless you recast your mortgage. You'll end up making fewer total payments and paying off your mortgage faster. Because you'll pay less interest, you'll save money in interest over the life of the loan.
Since you're putting extra money into your mortgage, your debt will shrink and your equity in your home will rise. This not only brings greater financial stability, but it also means you're likely to have more options and lower interest rates when you come to remortgage to a new loan deal.
A top-up fixed deposit (FD) feature allows existing FD holders to add more funds to their FD accounts without opening a new FD. Essentially, it enables individuals to increase their investment in an existing FD, usually at the prevailing interest rates offered by the bank.
If you have a closed fixed or variable rate mortgage, there are a few things you should be aware of before you make your prepayment. Closed mortgages allow you to make extra principal prepayments up to 20% of the original mortgage principal per year.
Interest can be paid directly into your account – so you can watch your savings grow. You will not be able to add savings to your account during the term of the fixed rate. You won't be able to dip into your savings, so it can reduce the temptation to spend.
Ideally, you want your extra payments to go towards the principal amount. However, many lenders will apply the extra payments to any interest accrued since your last payment and then apply anything left over to the principal amount. Other times, lenders may apply extra funds to next month's payment.
Put simply, you will save significant amounts in interest. Most mortgage contracts allow borrowers to make extra payments, and they allow all of the extra money to be applied to the principal amount of your loan. That means you are paying down the real amount of the loan – the money you borrowed – faster.
Making extra mortgage payments may unlock various financial benefits including interest savings, early loan payoff, building equity faster, and increased financial flexibility.
When you make a lump-sum payment on your mortgage, your lender usually applies it to your principal. In other words, your mortgage balance will go down, but your payment amount and due dates won't change.
Deciding on a set amount you are going to overpay regularly could help you budget. And if things change you can stop at any time. A lump sum could save you money on interest and clear your mortgage faster, but you won't be able to get your hands on the money once you've paid it over.
In this scenario, an extra principal payment of $100 per month can shorten your mortgage term by nearly 5 years, saving over $25,000 in interest payments. If you're able to make $200 in extra principal payments each month, you could shorten your mortgage term by eight years and save over $43,000 in interest.
Smart Mortgage links customer's savings accounts with mortgage accounts. The more you save in the designated savings account, the more interest you can earn on your deposits, helping you to offset the interest payments on your mortgage1.