Home loan customers could save over $100,000 by taking advantage of the low interest rate environment and paying off their mortgages faster, according to new data released by Westpac.
The data shows that two thirds of Westpac customers are ahead of their mortgage repayments by an average of eight months, which totalled $8,563 for the year ended 31 October 2018. Homeowners living in Nelson are the furthest ahead at 20 months, followed by Tasman and Marlborough on 15 months – though Aucklanders have repaid a greater median amount, totalling $14,456.
According to Westpac NZ general manager of consumer banking and wealth Simon Power, paying off an extra $150 a fortnight on a $500,000 30-year mortgage could shave up to 6 years off total repayments, and save over $106,000 in interest.
“With many mortgage rates falling in the past two weeks to historic lows, it’s a great time for customers to get ahead by holding their repayments at the same level at which they have been paying,” Power stated.
“If people are able to increase the amount they repay each fortnight or month by $50, $100 or even $200 when they re-fix, it can make a substantial difference to their overall interest savings.”
He said the bank had many tips to help customers pay off their loans faster and save on interest, and customers have the chance to make significant savings in light of the low interest environment.
“It can be as simple as changing your repayments to fortnightly instead of monthly,” Power said. “You end up making two extra repayments per year, which reduces the amount owed and the interest paid.
“People could also consider increasing their regular loan repayments, shortening the term of their loan, and consider paying lump sums off their loans when it comes time to re-fix. Also, choosing to float a portion of their loan allows them the flexibility to pay off that part of their loan faster.
“Westpac’s mission is to help our customers financially, to grow a better New Zealand. One of the clearest ways we can do that is to support our customers to save more by paying off their debt faster.”