RBA Cash Rate: 4.35% · 1AUD = 0.67 USD · Inflation: 4.1%

# 1300 66 12 11

Search
Home Loan Variable: 5.94% (5.95%*) • Home Loan Fixed: 5.79% (6.39%*) • Fixed: 5.79% (6.39%*) • Variable: 5.94% (5.95%*) • Investment IO: 6.14% (6.58%*) • Investment PI: 5.99% (6.61%*)

# Clearing Debts and Paying Off Your Home Loan Early

#### Here’s what to do:

1. Make Additional Repayments: Let’s say you have just taken out a loan a loan of \$600,000 for 30 years and have an interest rate of 5.5%. If you pay just an extra \$500 per month onto your loan then you can pay the loan off 7 years and 9 months sooner.

This alone will save you \$186,617.91 in interest. To calculate how much you will save you can input your details here and see for yourself. You can use our free calculator here – Extra Repayment Calculator

Finding this extra money may be a stretch for some, for others it might be quite easy, but if you track your expenses and look for waste and bad deals you should be able to find some additional money to put on your mortgage each month. If you have other debts at higher interest rates, it will make sense to pay them off first or to consolidate your debts into your mortgage and use those payments as additional repayments on your mortgage.

If you need help calculating if this is the right path for you, then fill in the form and I’ll help you work it out based on your circumstances.

2. Add a 100% Offset Account: When you have a balance in your 100% offset account, that money counts against your mortgage balance while it is in there. Interest is calculated daily on most mortgages. Say you have \$50,000 in your offset account from day 1 of your mortgage. Using the same \$600,000 loan for 30 years at 5.5%. That \$50,000 balance in your offset account will save you \$172,992 in interest and pay your loan off 4 years and 3 months earlier.

The other way to use an offset account is to deposit your pay into your offset account, pay for everything on credit cards and then clear your credit card balance when it is due from your offset account. That keeps the balance in there higher for longer, saving you more interest which also means you are paying off more principal sooner, which lowers your interest further…

3. Lower Your Interest Rate: There are two ways to lower an interest rate on a mortgage – negotiate with your current lender (a free service we perform for our clients every year and monitor regularly) or we can find you a better rate by refinancing you to a more suitable loan. Surprisingly not all loans are well designed for being paid off early. So be sure to explain your goals when you talk to us.

If we were able to cut .5% off the interest rate off our example loan of \$600,000 for 30 years reducing the rate from 5.5% to 5% then you would save 3.5 years and \$75,103 in interest on your mortgage just by keeping your repayment the same as it was before the refinance.

If you want to pay off your home loan faster call 1300 661 211 or fill in the form below and we’ll organise a no-cost, no-obligation finance strategy session. We’ll look at what your options are to pay

Ask us a question and we will get back to you within 1 working day

E. Australia Standard Time [ UTC+10, Default ] [ CHECK TO CHANGE ]

Want to have a no-obligation discussion?

General

### Buy a home with a 5% Deposit – First Home Guarantee Home Loan

Do you have a small deposit of 5%? It may be possible to buy your first home using home loan schemes such as the First Home Guarantee without LMI.

Lenders Mortgage Insurance

### Are You Eligible for a LMI Waiver? Find Out If You Qualify for No Lenders Mortgage Insurance

Find Out If You Qualify for a LMI Waiver and Say Goodbye to Lenders Mortgage Insurance Australian homebuyers often face the high cost of Lenders