Many Australian homeowners are putting savings from lower interest rates straight back into paying off their home loans, a recent survey has found.
The 2013 Homeowner Intentions Survey* showed that 77 per cent of respondents were making additional repayments towards their mortgage.
The most common method was to contribute as much as possible to each repayment then redraw funds if necessary.
This was followed by contributing as much as possible to each repayment and avoiding any temptation to redraw the funds, or rounding repayments up to the nearest hundred.
Head of Corporate Affairs at Mortgage Choice, Belinda Williamson remarked that if your investment strategy or overall goal is to repay your home loan, then making extra payments is a great habit to adopt.
“It will help you to repay the home loan sooner and to build up a buffer to cope with future
interest rate rises or changes to your financial situation”, Ms Williamson said.
“It was interesting to see that of those people who were making additional mortgage repayments, over 50 per cent said they had not made any lifestyle sacrifices to do so”, she added.
“When asked whether they would continue to make additional repayments if interest rates go up, nearly 45 per cent said they would as they had already factored in higher repayments.
“With so many respondents finding extra mortgage payments manageable without lifestyle changes, imagine what could be achieved by making some small sacrifices and contributing as much and as often to your loan as you possibly can.
“Even small, regular extra repayments can make a significant difference - the sky’s the limit”, she concluded.
The survey showed that while the majority of homeowners feel positive about their financial position, their most pressing financial concern or commitment at present is ‘repaying the mortgage’. This was followed by the ‘cost of living’ and ‘repaying credit card debt’ to make up the top three responses.
*Survey of over 1,000 Australian mortgage holders, conducted by Mortgage Choice.