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3 reasons to aim for an advance position

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How to get ahead of your home loan

When paying a home loan, you are advised of the minimum amount you must pay each month, which can be made on a monthly, fortnightly or weekly basis to meet your loan requirements (see Getting the gist of home loan repayments). But can you manage to pay a little bit more? Paying more than your minimum repayment amount puts you in an ‘advance position’. Why would you want to do that? Here are three good reasons to be in advance.

1. Pay off your loan faster

This is the main reason to pay more than your minimum on your home loan. By paying more each payment, you are bringing down the amount you owe. Even if it is only a little bit, over time you are reducing your debt. 

You may be aiming to cut a 30 year loan down to 25 or 20 years so you can be debt free faster. Or perhaps you want to build up your equity in your loan so you can be in a good position to refinance your loan. 

By paying just over an extra $200 a month in the example below, a $250,000 loan can be paid off eight years sooner.  

Repayments

These figures are taken from Keystart’s Repayment Calculator tool. The results presented by this calculator are estimates only, and are provided for illustrative purposes only. 

2. Manage unexpected expenses

Picture this. You walk to the mailbox, there’s a familiar envelope from a service provider. You open the mail and are faced with a significant bill. Your heart sinks. Where will those funds come from? Ideally your advance position is working to bring down your home loan, but in reality if you have enough funds in your advance position you could use those funds to stop or adjust a mortgage repayment to cover an emergency from time to time. 

Keeping an eye on your budget and planning ahead is critical. At Keystart we need up to up to 24 hours’ notice to arrange a hold on a repayment. Contact Keystart if you would like to find out more about this facility and we can assess your account status. 

3. Peace of mind

Meeting your home loan repayments is an obligation you have with your loan provider. Knowing that you are not only meeting these obligations, but are going beyond can provide great peace of mind.  

Keystart clients can watch their advance position balance grow in the Keystart client portal. Nice!

Want to pay additional funds?

If you decide to pay more than your minimum repayment on your Keystart home loan to grow your advance position, you can simply change your repayment amounts by contacting us and we will alter your direct debit facility. You can also make a one-off payment via BPay whenever you wish. You can make BPay payments via online banking or at any Australia Post outlet. If you do not have your Keystart BPay card available, give us a call to assist you.

More information

If you would like to talk to us about your advance amount or if you have any questions, please call us on 1300 578 278.

Keystart recommends that you seek your own independent financial advice prior to making any decisions about your financial needs.

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*Disclaimer

Whilst Keystart has made every effort to ensure the accuracy of information in this blog it is general only. The information in this blog is subject to change and has been prepared without talking into account your financial situation, requirements and objectives or needs. Keystart does not warrant that the information in this document is free from errors or omissions or that it is suitable for your circumstances. You should seek independent legal and financial advice before considering whether or not to act or rely upon the information in this document. Keystart is not liable (except to the extent that liability cannot be excluded by statute or operation of law) for any loss, damage, cost or expense arising directly from, or connected in any way with, or any use or reliance on the information in this document. All information cited in this blog is subject to change without notice to you.

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