Smart Tips For Paying Off Your Home Sooner

Wondering how to pay off your home loan sooner? We look at some things you could do.

Australian home loan interest rates remain at historic lows, and the opportunities for paying off a mortgage early are better than ever. Used in conjunction with low rates, here are some extra steps that can speed up loan repayments and reduce your loan balance.

Make higher repayments

One of the easiest ways to quickly reduce the balance of your mortgage is to make larger loan repayments. The minimum repayments required on a loan are calculated on the amount owing and the prevailing home loan interest rate. Repaying more than the minimum can cut the overall term of the loan and save you thousands of dollars in interest. A mortgage repayments calculatorwill quickly show what savings can be achieved.

Some lenders may charge you an early payment cost for paying your loan in advance. This is particularly the case with fixed-interest loans, so it's always best to check up-front. These costs can be large.

Make more frequent repayments

Home loans are often structured so that you make monthly repayments. But making fortnightly repayments instead can reduce the term of a loan and save interest. By making fortnightly repayments, you are paying the equivalent of half of your monthly repayment every two weeks. This allows you to make the equivalent of one extra monthly repayment per year. Extra repayments will ensure the loan balance is lower at the time of the month the interest is calculated.

Use an interest offset account

Most lenders allow you to package a mortgage with an interest offset account. An offset account allows you to reduce the amount of interest paid on your loan by offsetting the amount in the (offset) account against your loan balance. Wages and other income can be deposited into your offset account. Note that you don't earn interest on the funds in the offset account, and that offset is usually only available on variable rate loans.

Seek out lower rates

Although obvious, many borrowers take out a mortgage and then stop following the home loan market. With interest rates constantly changing, it pays to monitor the latest rates. If rates go down, contact your lender or broker and ask if they can reduce the rate on your loan.

Don't take the rate cut

When a lender reduces the interest rate on its home loans, usually in line with a cut in official interest rates, your first thought may be to reduce your loan repayments accordingly. However, by maintaining your loan repayments, you effectively repay more than the minimum loan repayment. If it's possible to do so, this will help you cut the term of the loan and save on interest.

Pay both principal and interest

While you can make lower repayments by choosing an interest-only loan, doing so means the principal component of the loan will not be repaid while you are only paying interest.

Pay fees upfront

When initially taking out a mortgage, lenders will often roll the establishment costs and charges into the loan. While this may help the short-term budget, it's worth paying these costs separately to lower the overall balance of the loan from the start.

Use your home equity

As home prices rise, you build more equity in your property. Redrawing funds from a home loan to pay for renovations and other costs can be a much cheaper source of funds than others.

Set up a split loan

A split loan, sometimes referred to as a combination loan, enables borrowers to divide their mortgage into both variable and fixed components. By doing this, you can not only make extra payments on the variable component, but also lock in a lower fixed rate. Extra payments can often be made on the fixed loan too, up to a limit specified by the lender.

Get a financial package

You can often lock in a discounted loan rate with a financial package and also find special rates on other products and services. Putting those savings into your mortgage is a great way to get the best of both worlds.

With just a few easy steps, borrowers can significantly reduce the length of their mortgage and save thousands of dollars in the process. A mortgage broker can assist you in setting everything up.

For more information on how you can pay off your home loan sooner, contact our Mortgage Broker Dale with the details below.

Contact our Mortgage Broker Dale at our office:

82 Smith Street Warragul Vic 3820 

PO Box 1477 Warragul Vic 3820

Phone: 03 5623 3778  |  Fax: 03 5623 4778 




Want to Renovate the Smart Way? Avoid These Four Mistakes

Never renovated a property before? Here are four mistakes to avoid when it's home improvement time.

Mistake 1: Not doing enough research

Don't start work without knowing the details. You need to research building materials and tradespeople, and understand the legal and regulatory aspects of a renovation.

Find out how much materials and tradies cost. You can request several quotes to get a realistic price range. You can also find out if there are discounts on offer – for example, for bulk-buying or early payment – or opportunities to negotiate.

Before you start, ask your local council whether you need any permits. Fines for unlawful renovation can be hefty, as can the cost to repair or rebuild.

Mistake 2: Failing to plan properly

Poor planning can cause big problems. Your budget or schedule could blow out, the property might end up worse off, or you might not achieve what you really wanted to.

Planning should include these three elements:

  • Scope: What you want to do and the resources you need.
  • Schedule: When different aspects of the renovation should happen.
  • Budget: How much you plan to spend.

If you're having trouble, consider hiring professionals. This may be an architect to provide drawings, or a construction manager to juggle the different elements.

Mistake 3: Underestimating costs

First-timers often make the mistake of setting a budget – "we'll spend $50,000" – without knowing what it will buy. Don't fall into that trap. If you research building materials, you'll be more likely to buy the right quantities at the right price. If you make detailed plans, your trade quotes will be more accurate. Good research and planning will help you create a realistic budget.

Remember to build some contingency ¬into your budget in case things don't go to plan. Adding 10 to 20 per cent to the final budget is a good rule of thumb.

Mistake 4: Hiring the wrong people

Labour is one area where you'll want to cut costs, but quality should trump price.

  • Hire for the job: It's tempting to hire a jack-of-all-trades, but try to hire specialists for important jobs. For example, hire a plumber, not a handyperson, to install a sink.
  • Make sure the tradesperson is licensed: The tradie is accountable for his/her work, plus the renovation comes with a warranty.
  • Check references: Word-of-mouth recommendations are often the best reference. Also look for genuine testimonials and signs of quality work, such as industry awards or positive media coverage.Your house has a better chance of becoming your dream home when you avoid the most common renovation pitfalls. When it comes to financing your renovation, your mortgage broker can help.

Contact our Mortgage Broker Dale at our office:

82 Smith Street Warragul Vic 3820 

PO Box 1477 Warragul Vic 3820

Phone: 03 5623 3778  |  Fax: 03 5623 4778 


Confused About Home Loan Pre-approvals? Follow These Four Steps.


Ready to buy a property? You'll need to show the seller you have enough money. For most people, this will mean getting a loan, and the first step to getting one is obtaining pre-approval for it.

Pre-approval – also known as conditional approval or approval in principle – is an indication from a lender as to how much you can borrow. If you have pre-approval, vendors and agents know you're serious about buying. Here are the steps you need to follow.

1.Gather your financial information

To get an idea of how much you can borrow, and therefore what you can afford to buy, you need to give the lender a comprehensive picture of your finances. This includes your income and assets, and your financial obligations such as existing debts and living expenses (including ongoing bills, entertainment, food and car expenses, etc).

You'll need evidence of everything:

  • Pay slips and tax returns for your income.
  • Title deeds for tangible assets (i.e. physical items such as buildings, machinery and inventory), and portfolio statements for intangible assets (non-physical items such as copyrights and patents).
  • Loan statements for existing loans.
  • Credit card statements showing your credit limit.If you already stick to a budget and have a regular savings history, you may want to provide bank statements to demonstrate this.

You can use all of this information to get an idea of how much you may be able to borrow. There are a number of free mortgage tools and calculators that can help.

2.Meet a lender or broker

Make an appointment to speak to a lender or mortgage broker. Most will provide a list of what you need to bring with you, such as the evidence explained above and the required forms of ID.

At the appointment, the lender or broker will use your information to calculate an approximate borrowing figure. If you want to proceed, you can fill in a pre-approval application form.

3.Undergo a credit check

The lender will arrange for an independent credit bureau to perform a credit check on you. This may affect whether or not you can borrow money, and how much.

4.Receive conditional approval

Assuming your credit rating allows you to borrow, you'll then receive a conditional approval certificate from the lender. The certificate is usually valid for 90 days. This is an indication, not a guarantee, of the amount you can borrow.

Use this figure to work out how much you can spend on a property, taking into account the size of your deposit. Factor in expenses such as conveyancing fees, stamp duty and so on. Also consider that you may not be able to borrow as much as the conditional approval certificate indicates.

Securing pre-approval will allow you to househunt with confidence.

What happens next

Once you've put in an offer on a house – whether at auction or a private sale – you'll need to get full approval on a loan. Contact your lender or mortgage broker with details of the property, and they'll work through the home loan application process with you.

Obtaining pre-approval for your loan is an important part of the home-buying process. Contact our mortgage broker Dale today for help with finding out how much you can borrow.

Contact our Mortgage Broker Dale at our office:

82 Smith Street Warragul Vic 3820 

PO Box 1477 Warragul Vic 3820

Phone: 03 5623 3778  |  Fax: 03 5623 4778 


RBA Surcharging Rules as of September 1.


On September 1st, the Reserve Bank of Australia (RBA) rules for surcharging are coming into effect for all businesses.


This means, if you apply a surcharge for card payments to recover all or part of your merchant service fees, you'll only be able to charge up to the average amount it costs you to accept that card type for that transaction for a 12-month period. Monetary fines for non-compliance can be enforced by the ACCC if businesses incorrectly surcharge.


Full details of the rules are available on the RBA website.

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