How AI Legalese Decoder Can Simplify your Mortgage Agreement
- May 3, 2024
- Posted by: legaleseblogger
- Category: Related News
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**Seeking Advice: Tips for Paying Instalments**
I have been contemplating the best approach to handling instalment payments. I am curious if anyone has any essential tips or ‘must-dos’ when it comes to this process. One suggestion I have come across is the idea of paying the first instalment twice when initiating payments. I am interested in exploring more strategies to manage instalments effectively. Your insights and advice would be greatly appreciated. Thank you!
**How AI Legalese Decoder Can Assist**
AI Legalese Decoder can provide valuable assistance in navigating the complexities of instalment payments. By utilizing advanced technology and algorithms, this tool can analyze and interpret legal jargon related to payment terms and conditions. It can help identify key details such as payment schedules, penalties for late payments, and potential discounts for early payments. With AI Legalese Decoder, users can gain a better understanding of their instalment obligations and make informed decisions to optimize their payment strategies.
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Paying on time is a must-do
If possible pay more than your minimum payment. The difference paying an extra $50 or whatever you can afford will make a HUGE difference to how quickly you repay the debt and how many thousands you can save in interest.
We pay an extra $6 (yes, $6) each payment and it’s projected to reduce our loan from 30 to 27 years, saving $8000 in interest. Highly recommend rounding your payment to the nearest 10
Pay the first instalment and repeat for 20 to 30 years.
Also, get use to talking about mortgage rates with your friends
Most banks allow you to pay up to 5% of the loan amount per year in additional payments without any penalties.
Take a look at your first few payments and how much interest is being charged, it may be a bit depressing but it will show you how valuable paying a little bit extra. My mortgage payment is around $940/w and of that ~$800 is going towards interest. This means if I can pay an extra $70 then I am paying off 50% more of the principle, an extra $140 means my loan is being paid off twice as fast.
This hugely reduces to total interest I’ll pay over the life of the loan.
Live in your house for at least a year before doing anything to your gardens. You don’t know what bulbs etc or flowering plants you have. Eg we didn’t know we had gladiolus which are one of my favourite flowers
-Offset a floating value with your emergency savings if your mortgage provider offers this
-If you manage to build savings between fixed terms, make lump sum payments when your term comes up
-Make extra payments to floating amounts if you have funds available (I used to do this the weeks I did overtime, put extra earnings straight on mortgage as long as you dont need the money elsewhere)
We paid ours off in 7 years, final payment was 3 weeks ago
If you can pay one extra monthly payment a year, you knock the term down from 30 to 18 years (from memory). Whatever your term is now, and I know it probably feels like you’re stretched to the max, don’t allow lifestyle creep (too much) and you’ll be able to smash it out much quicker than 30.
I don’t think a bank will allow an extra payment from the get go. Just keep it a savings account should your payroll team make an error or there’s a system issue and you don’t get paid in time. I use my regular emergency fund for this purpose.
Edit- my damned spelling.
Don’t go out and buy lots of things at once, you’ll figure out how you actually use the space then fill it with useful shit.
As your incomes rise. Pay more for your mortgage and avoid lifestyle creep. You don’t need that new iPhone and the payoff will be tenfold
Pay as much extra as you can. If you can redraw on overpayments you have an emergency fund to access if you need. The difference in an extra 150 a month could end up being 100k in 30 years.
Don’t forget to live!
Congratulations mate!
My first home loan ($500k) I locked at 4.90% back in 2021.
It’s coming off fixed this year and planning to do the ‘smart’ thing like offset, split mortgage etc.
It’s daunting but do your research and adjust which one fits your situation.
Living is still important so don’t compromise on that, sacrifice is required but also don’t forget you need to be living to make a living.
Lump sums and upping payments where you can. I upped mine after thr first year or so by just $50. Put the odd lump sum on here and there. In the end was paid off in about 12 years,
My payments per week at the end were about twice my original as I upped with pay rises erc.
I ended up saving the price of my house in interest.
Well worth doing, and i did it on my own so if you get an extra income makes it so much easier,
Save for a rainy day. My first dive into home ownership really took me by surprise. I wasn’t prepared for maintenance (happens more often than you might realise) and interest rates increase. I went in fully naive. I have since learnt my lesson the hard way. Fortunately, I made it work.
I can say this with full confidence, have some savings ready to roll when shit goes left.
What does paying your first instalment twice achieve?
Congrats. The good news is that the first ten years are the worst.
Switching to fortnightly repayments would lead to savings of approximately $549 over 30 years, when compared to your total interest bill paying monthly, over the course of your loan.
When interest rates go down, keep your repayments the same but just decrease the term of the loan. E.g. from 30 years to 27 years. You’ll need to ring the bank and request this as last time I looked, you can’t do this on internet banking. This will increase the amount of principal you pay back each month and will cushion you when interest rates go back up as you can just increase the term again. If rates go higher than when you first took our the loan, your repayments will increase at that point, but you’ve avoided most of the pain.
Set fortnightly repayments, this will reduce the total interest over the lifetime of the loan allowing you to pay it off faster than monthly repayments.
Great comments/useful tips-when my marriage broke up 5 yrs into a 25 yr mortgage I was a single parent on the benefit-working part-time and the APs always went out first before anything else-never ever let your insurance lapse (house and contents)-and ask yoursef if looking at new items (clothes, electronics, soft-furnishings etc) do i want it or NEED it!!! Congratulations!!!!
Pay more. Every extra $1 is worth $3 by the end.
Extra $100 a fortnight wiped 5.5 years off ours.
Our bank does 10% extra payments on top of the set amount.
late Middle English: from Old French, literally ‘dead pledge’, from mort (from Latin mortuus ‘dead’) + gage ‘pledge’.
Quite dreadful to be excited about this.
Joking mate, congratulations!
Pay it off as fast as possible. Keep a chunk of the mortgage in a flexible/offset account so there’s nothing stopping you from paying it down.
Once comfortable with the mortgage payments, have a play around with the repayment calculator your bank has.
Your likely to find a ‘sweet spot’ where a little bit extra will knock many years off your mortgage along with less interest. This sweet spot is gonna be different for everyone but it worth understanding. I wish i was more proactive with this when rates were 2%
Have a few payments in reserve incase shit hits the fan one day
first installment on red in skycity
When it’s time to re-fix. You can tell your bank what you want the repayments to be. Choose a really high number.
I chose 5k. Now I can choose what my repayments are anywhere from 500-5k a month, no penalties at all.
I can literally slide a bar on the app from 500-5k the day before the mortgage gets paid
Pay fortnightly not monthly.
What I did was divide my entire mortgage by 30 (total years) and aim to pay off that amount in total each year. So that means overpaying as much as you can to meet that number – im determined to not let interest rates slow down my progress to owning my home outright!!
They wont allow you to pay your first installment twice.
Top tips would be pay as much off the mortgage as quick as possible!
Other than that, just look after the property and try and add value wherever you can.
Once you build enough equity in your property, depending on the market, look into using that equity to buy a rental. Tenants will cover most of the costs and equity will continue to build for you.
Good luck!
Set and forget for the period you are fixed at. Nothing you can do now will change that other than the extra amount you can pay. I think westpac allows you to pay 20% extra above the minimum.
That’s the easy part. While that’s doing it’s thing in the background it’s your personal day to day finances that will make the difference.
My advice is to stick to your current set amount and forget about the mortgage for at least 6 months.
Do a budget. A really detailed one. Go back 3 months or more. Get a really good idea of your average spend for all areas. Eating out. Entertainment. Coffee dates.
Random spending. Groceries. Utilities etc. Include two goid yearly trips at least.
Now identify problem areas.
Usually it’s personal individual spending.
For example for an individual the utilities, phone and meals don’t count if you eat at home from your grocery shop. Make lunch etc.
But if you buy lunch every day and get coffee and other stuff it all adds up.
Set a budget for weekly spending for these things.
As a couple you should budget to eat out once or twice a week which can include a date night. Like movies plus dinner.
But if you want two see two movies or two dates or eat out a third time that’s over budget and would come out of personal spending.
100$ a week per person is heaps.
You can buy lunch 4 times. See a movie. Buy beer or wine and get take aways once or twice and still have change.
Or maybe you want to buy tickets to a concert and your Entertainment budget is maxed. You might cut out buying lunch for a few weeks or no beer and save up.
I’ve helped lots of people budget and this is the area you can really save. Have separate bank accounts for this money.
Most people are spending 300 a week on average, on just shit they don’t need.
Get gas, buy a V or coffee. Or they could just had water.
Some are spending like 800 a week without realizing it. It’s usually girls. Hair makeup nails and coffee etc.
Once you set a budget and there is no extra money in the account, you will start making smart choices and you will even find you start to save that money too.
When I first did this with my wife we both naturally didn’t spend much and almost got in competition with how much we were saving.
You may even find 100$ is too much.
You can go pretty hard out with meal planning but as long as you have a reasonable grocery budget and stick to it you will be fine.
Some are probably already screwing up their faces, but we still did everything and had lots of fun.
On pretty low salary we paid off a house incredibly fast.
Sacrifice a little now to live the easy life later. Thingvis those good habits carry on. You can still treat yourself and now I can buy whatever I want when I want it but generally I stick to my good habits, but I am buying those bluff oysters everytime.
Find a mortgage calculator that adds in extra repayments so you can see how much difference in interest cost and time extra money can make.
Also we are likely near the peak of interest rates and they should reduce over the next 24 months. Don’t change your repayments as they drop, keep them at the current amount.
We can afford to pay a bit extra every fortnight, so we set our repayments $100 per fortnight extra. Saves a few years of repayments in the long run.
But do consider having savings or excess in your budget when setting the repayments, to pay for emergency’s without it being too tight.
You need at least $2000 in a bank account at all times.
For when a window breaks.
Or you need to replace the dishwasher.
Or you have to call a plumber in the middle of the night.
When this happens you won’t stress, you’ll just get shit repaired. And then you’ll make sure you reset your account back to whatever you’ve decided your emergency amount is.
Check your fuse box. If it has the old fuses that use wires and not switches make sure you have fuse wire INSIDE the fuse box and that you know how to change the fuse wire. If the fuse keeps tripping then you need to use your $2000 to pay for an electrician to figure out what’s going on.
Your house doesn’t have to look like one out of a magazine. It’s quite nice living in a house where you actually own everything you look at and you don’t owe money for any of it. There’s no point in stressing about how much a renovation is going to cost when you are just doing it for looks. Wait to do that stuff.
Up your repayment amount every time you get a pay rise and pay as much as you can afford comfortably. Whenever you refix, you can determine the repayment amount. You can repay a 30 year mortgage within <10 or 20odd years depending on your income, outgoings, and sum owed allows.
View mortgage payments as reverse saving. If you’re paying 7% you are essentially earning 7% tax free. So it is better to pay off more (while keeping adequate emergency savings) than building up more fixed term interest than you need.
If you get paid fortnightly, also pay your mortgage fortnightly, you slip in an extra half a monthly payment a year and have the same fortnightly money available. You technically also pay less interest since its calculated more frequently, but the difference will be tiny.
Pay off all other higher interest debt off first. If you must take on a personal loan for a car or house improvement, add it as a separate short term mortgage facility rather than taking a new loan. The interest will be much lower if you leaverage against your house. Though preferably save up for these items instead.
Happy farming
Make an annual budget of all the house stuff. Rates, Regional Rates, Water Rates (approx). Insurance and…importantly repairs and preventive maintenance.
I know you don’t want to think about repairs and maint on a house you just purchased but all property needs upkeep, and it’s not cheap so start from day one. Perhaps 1% of the dwelling/improvement value (not the property value which includes land) a year.
Annualise all those costs and divide by 12. Start putting that away from settlement day, so all those costs are covered as they fall due.