Like many Australians I understand the cost associated with paying off a home loan. It’s not small by any means, so let’s not pay the banks any more money than necessary.
For many of us making some quick and easy changes could help you save you in the long run. A short conversation with us will help determine if our 3 tips can work for you.
Don’t set and forget
Banks love complacent people. It makes them more money and if you don’t know what your interest rate is chances are you're probably one of them. There are some large interest rate differences between banks in the market, which can cost the average Jo an extra $3,000 per year on a $500,000 home loan. So be proactive, check your interest rates, speak to your broker or your bank and ask them for something better. Refinancing now is actually easier and cheaper than it used to be and a little bit of effort can go a long way.
Get rid of your savings account
Banks pay you out less in interest than you pay them so unless you can generate higher returns on your savings relative to how much you are paying in interest it is probably not worth using a savings account. Pumping any excess cash into your home loan and leaving it in redraw or in an offset account could save you thousands (you will need to check if you have one of these features on your loan). If you don’t know what these are drop me a line and I will happily walk you through them.
Small things count
Did you know on a $500,000 loan an extra $50 per month will save you close to $16,000 over the life of your home loan and clear the debt one year earlier? It’s surprising how much a small change can make. So be mindful of what you’re repaying and if you can afford it pay a little bit more. An extra $50 per month might be easier to find than you expect.
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