Pay home loans fortnightly to reduce debt, advises expert

Consumers looking for a new way of dealing with home loans might find it is a good idea to increase the regularity of their payments.

AMP financial planner Tony Rigby advises doing so after credit cards have been targeted, as the interest rates on plastic are likely to be higher, reports.

He remarks: "The most effective way to save interest on your home loan is to make extra repayments each month.

"Making payments fortnightly instead of monthly can also reduce interest."

For example, paying $200 more per month on a $300,000 loan – bringing the repayment to $2,368 every four weeks – could save people about $80,600 in interest on a deal with a 7.25 per cent rate.

Author of Pay Off Your Mortgage Fast and principal consultant at Manage Your Finance Graham Couper-Smith agrees, saying home loans should be targeted with discipline.

He believes a quick repayment can give people their lives back, although it is important to be realistic about any goals.

The latest MFAA Bankwest Home Finance Index found mortgage brokers are aiming to be viewed by the investor community as offering worthwhile services.

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