Tips to pay off your home loan faster

1. Make extra repayments

Any additional repayments you put into your home loan, such as bonuses and tax returns all work to reduce the principal on your home loan faster. The earlier in the mortgage loan term you begin making additional repayments, the greater the benefit in terms of time and money saved.

2. Make your first repayment on settlement date

Your first home loan repayment will generally fall due one month after settlement. Making your first repayment on your settlement date reduces the principal before the first lot of interest accrues on the amount you have borrowed.

3. Make extra repayments right from the start

Regular additional laon repayments made right from the beginning of your home loan term will have a much greater effect on the overall time and cost of your home loan than starting five or ten years into the loan. Even if you are already more than five years into your loan term, you can still make a considerable saving by starting to make additional repayments now.

4. Make loan repayments more often

If your loan repayment amount is calculated monthly, you can make significant additional savings by paying fortnightly instead. This method will result in you paying an additional month's worth off your mortgage every year - reducing the principal faster. You can use the extra repayments calculator for an indication of how much you could save with different repayment amounts.

5. Look for a cheaper rate with good flexibility

The easiest way to pay off your home loan sooner is to find a lower rate than the one you currently have, but maintain (or even increase) the amount you pay each month. You can speak to the mortgage brokers at Intellichoice to assist you with the legwork and research. We will be able to help you find a home loan product from our panel of lenders, whose products will still offer you good flexibility. Most importantly, we will make sure that if you are going to refinance, the costs of doing so do not outweigh the benefits.

6. Pay loan fees and charges up front

Pay establishment fees, legal fees and Lenders Mortgage Insurance (if applicable) up front rather than incorporating them into your home loan. This will save you thousands of dollars in interest over the loan term.

7. Look for loans that offer features without a charge

Some home loan products will charge a fee for every redraw or extra repayment, to switch from a variable to a fixed rate, to port your loan to another property, take repayment holidays etc, but some won't. You can save the cost of fees if you know what you're likely to use and find a loan that doesn't charge you to use it. We will ensure that the home loan product we recommend suits your needs and circumstances.

8. Negotiate to make savings

You may find this more difficult now due to the current global credit situation, but you can still make some useful savings by negotiating with your lender on things like interest rates and fees. An Intellichoice mortgage broker will be able to help you focus on the area you are most likely to achieve a saving, but as a guide, interest rates and establishment fees in particular are good places to start your negotiations. Good savings and credit history and good work history will help you here.

9. Cut back on expenditure

Reduce expenditure on vices and redirect the money into your home loan instead. Smoking, an after-work beer, morning coffee and that afternoon chocolate fix all add up over the course of the week. Add to that buying at least one lunch, breakfast or dinner a week and you could be putting more than $50 extra a week into your loan.

10. Look outside the big banks

The big banks aren't the only, or even the best, places to borrow money. Many smaller banks, specialist lenders and credit unions have very competitive home loans available. Just because you haven't heard of a lender doesn't mean they aren't a reputable lender – your local mortgage broker will know which lenders are credible and suitable for your situation.

11. Home loan portability

A lot of people don't stay put in the one place for the 25 or 30 years their loan covers. Many home loans offer a feature called loan portability, which allows you to transfer your loan to a new property when you move on. Because it's the same loan, you avoid the cost of paying exit and entry fees.

12. Set up an offset or salary credit account

Make your earnings work as hard for you as you do for them by setting up an offset or salary credit account. The additional money left in your account every month will help to reduce the interest you are charged.

13. Align your repayments with your income cycle

If you have an offset account, changing your repayment dates to match your income cycle helps you to take advantage of the money sitting in your account for as long as possible.

14. Don't lower your repayments when interest rates fall

Keeping your repayments at the old level before interest rates fell will shave a significant portion of principal off your home loan.

15. Review your loan regularly

Reviewing your home loan regularly will help you to assess its effectiveness and take steps to correct any waste if necessary. Being on top of changes rather than waiting months or even years will potentially save you a lot of money. We can help review your finances each year to ensure that your home loan is still the best option for you.

16. Make use of internet banking

The convenience and cheapness make this an ideal tool to arrange your finances in a way that is most beneficial to you. Schedule payments to go when you derive the most benefit in terms of your home loan.

17. Combine for more saving power

Trying two or more of these tips in conjunction can ramp up your savings dramatically.

If you are looking for home finance that is in your best interest, it pays to talk to a mortgage broker who can help you understand what your home loan options are as well as set up your savings scheme with the right bank for you.

With so many home loan options on the market, an Intellichoice mortgage broker should be the first person you visit before you even start looking for your home. Speak to a mortgage broker today on 1300 55 10 45.