Save Money on your Home Loan

Home Loans, I know, not the most interesting of financial subjects and money matters, yet when handled correctly, you can save yourself thousands in bank fees and interest. The best ways to save money on your home loan are now covered.

1. Make Extra Repayments

Do this without things being a snap, only a stretch. The key is to pay yourself first. At least 10% of your income needs to go into your automatic savings program, and for those with a home loan with a line of credit or offsetting facility, they can view their mortgage as a form of enforced savings. Even for someone on a small variable loan of $200K, putting aside an extra $250 a week, $1000 a month will wipe off over 16 years off the life of a 25-year loan, obviously saving thousands in interest. Better for your savings to go into extra home loan/mortgage repayments, as opposed to sitting in the bank earning interest. It all makes senses as mortgage interest rates are generally higher than standard savings rates, and usually on higher balances too.



2. Shop around for the best deals

If your exit fees to leave your current lender are small, then why not refinance to a better deal. Even a 0.5% interest rate discount equates to at least a $100 a month saving for many people. Do your due diligence and ask plenty of questions. If you are unsure on which lender you wish to use, a mortgage broker is for you, however if you know you only want to deal with a certain lender, it will be a wiser to make an appointment with them directly. Being organised with your paperwork saves you both time and money. When you're organised, you're in a better frame of mind to negotiate your interest rate, and your lender will be more likely to want your business because of this. Wait until you have realised a decent amount of equity in your home, and there will be no need for your new prospective lender to send a valuer out. That will also save you at least $300, while also realising and unlocking additional equity in your home/property.

3. Fix a portion of your loan

As at the time of writing this, fixed rates are under 5%. Fixing a portion of your loan locks in lower repayments for a duration of time, while the remaining portion of your loan on a standard variable rate allows you to make unlimited, extra repayments.



4. Package your loan with the one bank

This will save you thousands alone. With loans such as a professional package line of credit, in addition to making extra repayments, you are able to order a transaction account, credit card and home loan all in the one package for a reasonable flat annual fee, that also includes all loan establishment fees for a discount. Your credit card annual fees, account keeping and transaction fees are also paid for by your lender. With the credit card, you also have the option for free extra insurances, or for the opportunity to earn some Frequent Flyer points on purchases for free. Just remember to not incur any interest for the latter. Some banks also offer discounts on insurance products if your home loan is packaged with them, thereby saving you additional money.







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