• Four tips to save money on your mortgage

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    Author: Bankwest (sponsored content)

    Even little changes you make now to reduce your home loan interest can have a big impact on how much you end up saving on your mortgage – and the time it takes to pay off.

    1. Make weekly or fortnightly repayments, instead of monthly

    This is a good way to save on home loan interest with minimal effort.

    Here’s the maths behind it. Interest is calculated daily and raised monthly on your due date every month. If you split your monthly repayments into two fortnightly repayments, or even four weekly repayments, you’re making repayments on your loan more frequently. This means the balance we calculate your interest on every day will be lower.

    An added bonus for anyone who gets paid weekly or fortnightly is that your loan repayments can be more aligned to your pay cycle, which can help when budgeting.

    2. Make extra repayments

    The more you pay off, the less interest we’ll charge on your home loan. Even if you make a small extra repayment to your loan every week, the savings can be huge. But don’t just take our word for it - crunch the numbers yourself on our extra repayments calculator to see how much money and time you could save by paying more off your home loan.

    While our fixed rate home loans let you make extra repayments up to a set amount each year, our variable rate home loans let you make unlimited repayments to help you save more on interest and pay your loan down even faster.

    3. Use a mortgage offset account

    An offset account is a bank account that’s linked to your home loan. You can use it like any normal transaction account, but the balance in it ‘offsets’ the amount you owe on your home loan. The interest you pay on your home loan is calculated on this reduced amount. So the more you have in your offset account, the more interest you could save.

    Tips to make the most of an offset account

    4. Consider splitting your loan between fixed and variable

    If you’re worried about fluctuating interest rates, you could choose to fix a portion of your home loan for an agreed term of one to five years while keeping the rest variable for extra flexibility. One great benefit of a fixed rate loan is that your repayments won’t change for the entirety of the fixed term, which can help you to budget.

    Disclaimer: Bankwest, a division of Commonwealth Bank of Australia ABN 48 123 123 124 AFSL/Australian credit licence 234945.

    First published by Bankwest.