Most lenders let you increase your regular home loan repayments. You can often do this online or via your banking app, although you may need to call your lender to set up the new payments.
Even a small extra repayment each month can make a big difference to your overall loan costs.
Here's a simple example using Finder's extra repayment calculator.
You borrow $600,000 over 30 years with a 5.00% interest rate.
Your monthly repayments are $3,221.
By the end of your 30-year term you'll have paid $559,353 in interest on top of your loan.
But if you increased your repayments by $100 a month you'd repay the loan in 28 years and pay $43,000 less in interest.
This is a neat little trick. If you repay your home loan on a monthly schedule you make 12 repayments each year. But if you switch to a fortnightly frequency you make 26 half-sized repayments each year.
Fortnightly repayments essentially give you an extra monthly repayment each calendar year. This puts you slightly ahead. And over 30 years it makes a big difference.
Use our fortnightly repayment calculator to compare the overall cost of the loan if you paid monthly versus fortnightly.
Maybe you have some extra cash in savings lying around. Nice. But you don't want to increase your regular loan repayment.
Instead you could just make a one-off lump sum repayment. That way you could pay off a small extra chunk of your loan in one go.
You still pay off your loan sooner this way. And if your loan has a redraw facility you can even pull that money back out in an emergency.
Does your home loan have an offset account? It's one of the best money (and time) saving mortgage features.
It's a bank account attached to your home loan. If you put your savings in there that money reduces your overall loan principal.
You make the same repayments, but your lender charges you a little less interest and takes off more of the loan principal. This means you pay off the home loan sooner and pay less interest.
Most Australians go for a 30-year loan term. But you could reduce your loan term.
Here's how it works:
Here's how that looks in reality:
Refinancing means switching from one home loan to another. Many borrowers do this for a very good reason: to get a lower interest rate.
Refinancing won't help you pay off your loan sooner by itself. But a lower interest rate means cheaper repayments. And you can use some of that extra money to pay your home loan off faster.
You can also change your loan term when you refinance to make it shorter.
So you've thrown all the extra money you can at your home loan, you've got your savings in your offset account, you've refinanced to a better deal and you've switched to fortnightly repayments.
You're doing everything you can to repay your home loan sooner. What's left?
This is where you start to look at other ways to save money, and put the savings into your mortgage.
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