Once you start making your home loan repayments, it can be easy just to set and forget. But did you know there are lots of really simple things you can do to pay off your home loan sooner? And we’re not just talking about making extra repayments (though they’re super helpful too!).
Here are our top tips for paying off your home loan faster, which can help you save interest and take years off your loan.
Make the most of your offset account
An offset account is a transaction account that’s linked to your home loan. It helps you save on interest by offsetting the balance of your account against the balance of your home loan, meaning you only pay interest on the difference.
You can use it just like an everyday transaction account. It includes unlimited transactions, and you can have it linked to a MyState Visa Debit Card and Digital Wallet.
Of course, the more money is in your offset account, the less interest you pay on your home loan, so think about ways you can boost your offset balance to maximise your savings.
One of the easiest ways to do this is to have your salary deposited directly into your offset account. You can set that up here.
Don’t have an offset account yet? You can apply by calling us on 138 001.
Make the most of your redraw (it’s free!)
Most MyState Home Loans come with a free online redraw facility. It works by letting you pay more money off your mortgage, while giving you access to any extra repayments you make above your minimum monthly repayment amount.
That means your money can be paying off your home loan when you don’t need it, and easily withdrawn when you do.
The best bit? It’s completely free! There are no fees for online redraw, so it’s a great way to help minimise the interest you pay without having your extra repayments completely tied up in your loan.
Learn more about home loan redraw.
Make repayments more often
This seems like a no brainer, but you might be surprised what a difference weekly and fortnightly repayments can make compared to monthly ones.
That’s because the interest on your loan is calculated daily, so the more frequently you reduce your loan balance, the less interest you’ll pay on your loan.
You can explore the difference more frequent repayments can make to your home loan by using our Home Loan Repayment Calculator.
Make extra repayments
You might consider rounding up your regular loan repayment when you’re able (even a few extra dollars helps!), or you might decide to make an extra lump sum repayment if the opportunity arises, like in the case of a work bonus, an inheritance, or money from the sale of an asset like your car.
Just make sure you check if there are any fees for making extra repayments on your home loan - you might have a limit on the number of extra repayments you can make on a fixed interest loan for example.
Check in on your loan regularly
- Is your offset account working effectively for you?
- Do you have money in your savings account that could be working harder against your loan?
- Are you in a position to change your repayment frequency, even temporarily?
Keeping an eye on your home loan and regularly reevaluating how it’s working for you as your life grows and changes is one of the best ways you can save on interest and pay your home loan off sooner.