Home Ownership: Should You Make Extra Repayments?

If you are looking to finance a house and purchase land with a loan, your lender may introduce to you a feature called “extra repayments”. This common home loan feature allows you to pay more than the monthly premium so you can pay your loan off quicker. The question is, are extra repayments worth the risk of having less cash every month?

Not that cut-and-dry

The general consensus would be “yes”, but there are certain situations in which entering into an extra repayments agreement could be detrimental. You first need to make sure you have enough money to take care of your bills and expenses, not to mention something to put away for savings. Once you’re sure these can be taken care of, only then should you consider your loan’s extra repayments feature.

Benefits of extra repayments

Extra repayments take advantage of the power of compound interest to help you own your home faster. In addition, putting more money into your home loan doesn’t incur taxes, and it’s very useful for improving your net worth and financial health. Indeed, extra repayments are a good idea—that is, if you can afford them. Talk to a financial advisor on how you can maximise this option for your needs.

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