6 smart moves to save on your mortgage

With home loan rates at a steady high, every little bit of extra interest you pay can add up to thousands over the life of your loan. So, if you’re feeling the pinch or just want to get ahead on your repayments, it’s time to think smart about how to save on your mortgage. With a few savvy moves, you can cut down costs and chip away at your home loan faster. 

1. Refinance your loan

If you’ve been with the same lender for a while, it might be time to consider refinancing. Lenders are constantly adjusting their interest rates to stay competitive, and what was a great deal a few years ago might not be so flash anymore. By refinancing your mortgage to a loan with a lower rate, you could save thousands in interest. Compare home loans to see if there’s a better deal out there. A few minutes of research could lead to significant savings.

2. Switch to fortnightly payments

If you’re paying your mortgage monthly, switching to fortnightly repayments could save you more than you think. By making payments every two weeks, you effectively squeeze in an extra repayment every year. It’s a simple trick that helps you pay off your loan faster and save on interest. Just be sure to check with your lender to make sure there aren’t any restrictions or fees for switching your repayment frequency.

3. Make use of an offset account

If you’ve got an offset account and you’re not using it, you could be missing out on a great way to save. An offset account works by reducing the interest you pay on your mortgage. Any money in your offset account directly reduces the amount you owe on your loan. For example, if you have $20,000 in your offset account and a $400,000 mortgage, you’ll only pay interest on $380,000.

4. Round up your repayments

Another simple way to get ahead on your mortgage is by rounding up your repayments. Instead of paying the exact amount required each month, round up to the nearest $50 or $100. It might not seem like much, but over time, these small extra repayments can make a big difference, helping you pay off your loan faster and save on interest.

5. Use unexpected cash to pay down your loan

Got a bonus from work? Received a tax refund? Instead of splurging on something you don’t need, consider using that windfall to make a lump-sum payment on your mortgage. Every extra payment reduces the principal on your loan, which in turn reduces the interest you pay in the long run. Many lenders allow you to make extra repayments without penalties as well as redraw facilities that allow you to tap into those funds if you need them down the track, but check your loan’s terms to be sure.

6. Review your home loan regularly

Lenders often offer their best rates to new customers and those with bigger deposits or more equity, which means loyal customers might be left on less competitive rates. Make it a habit to review your home loan every couple of years. If your current rate is no longer competitive, negotiate with your lender for a better deal or consider switching lenders. Also, don’t be afraid to ask for a better deal, especially if you’ve built up equity in your home. Loyalty doesn’t always pay off, so you should be prepared to compare and move if you can find a loan that suits your needs better.

A home loan is a long-term commitment, but that doesn’t mean you have to settle for high interest rates or inflexible repayment options. By taking control of your mortgage and making a few clever adjustments, you can save big. Whether it’s refinancing to a better rate or making small extra repayments, every step you take to cut down your interest could put you closer to paying off your home sooner.