Living with your home loan

A mortgage brings the thrill of home ownership, but once the champagne stops flowing, it's essential that you can live comfortably with your home loan. Try our simple steps to get the most from life and your home loan.

Make extra repayments where possible

Life will be a lot easier if you only borrow what you can comfortably repay – even after allowing for possible rate hikes. If you can manage it, additional repayments will fast track you way to mortgage freedom.

Even small extra payments can have a big impact. On a $250,000 mortgage, paying just $50 more each month on a 30 year home loan could trim your total principal and interest repayments by up to $51,379 assuming an interest rate of 8.25%).

A redraw facility on your loan also lets you tap into these additional repayments – a real plus for those unexpected expenses.

Offset accounts

Offset accounts are also worth considering. Rather than being paid interest on your spare cash, any savings are used to reduce or 'offset' the interest on your loan. It means more of your regular repayments go towards whittling away the principal.

Line of credit

Many home loans, including line of credit home loans, accept salary deposits, letting you use your loan as a one-stop-shop. Cash can be redrawn when it is needed, while any surplus goes to reducing the mortgage. This way, every cent is put to work, paying off the balance. But you do need to be disciplined about withdrawals.

Refinance your home loan

If your home loan is truly testing your mettle, think about refinancing. It may be possible to find a home loan that suits your needs and circumstances better. Speak to one of the experienced mortgage brokers at Intellichoice about refinancing your home loan and whether this is the best option for you.

Variable or fixed rate home loan

If you need to budget and really cannot afford much higher interest rates, a fixed rate gives you security.

However, beware that fixed rate home loans often restrict the repayments you can make and penalised extra repayments, so if you can afford to pay more than the minimum, a better option might be a split loan.

Splitting your loan between fixed and variable rates can offer an element of security, while still giving you flexibility. Alternatively, some mortgage lenders now allow you to make extra repayments to a fixed loan without having to pay a break fee. It is essential that you speak with your mortgage broker for more information.

Debt consolidation loans

Your home loan can also streamline debt management. Consolidate debts, including credit cards, into your home loan can make for easier money management, often reducing the total monthly repayment you have to make.

Sticking to a disciplined repayment schedule and controlling credit card spending can mean valuable savings in total interest.

For more details on getting the most out of your home loan, speak to an Intellichoice mortgage broker today on 1300 55 10 45.