Work, family, friends… life is such a joy but it all takes up time and for most of us, we travel through each day and suddenly find another year has flown past.

During that time, we’ve been paying our home loan and other financial commitments on auto pilot. Even though it takes time, it’s worthwhile doing a review of your home loan at least once a year to see how you can reduce your mortgage costs.

Have you heard of the ‘lazy tax’? It’s a term that refers to paying more than you should on things like home loans, personal loans and insurance. You end up paying more because you don’t take the time to review them – in other words, being lazy has a price.

And, given home loans are usually our biggest expense every month, it can really pay to set the time aside and investigate how you can cut your home loan costs. Here are a few ideas to get you started:

  • Pay fortnightly, rather than monthly – our Gregorian calendar gives us 12 months in a year with not 24 fortnights – but 26! By repaying your home loan fortnightly, you’ll be putting away an extra two weeks’ worth of repayments every year!
  • Pay principal + interest – it’s tempting to pay the bare minimum so we can get on with affording life; but take a good look at your regular expenses to see if there’s anything you can go without. Put that extra money into your home loan by paying off some of the principal, as well as the interest. You’ll end up having to pay less interest in the long run if you pay down the principal more quickly too!
  • Grab a latte and go – this one may seem silly, but it’s one of the easiest ways to pay off an extra $1,000+ every year. Every time you buy a coffee (or lunch or drink), transfer the same amount into your home loan. It’ll seem like small change at the time, but by the end of the year, you could’ve made a big difference.
  • Use your offset – if your home loan has an offset account, it’s time to start making it work for you. Offset accounts work as a transaction account linked to your home loan. The money in that account ‘offsets’ daily against the balance of your loan. So, it reduces the interest you need to pay because interest is only charged on your net balance (i.e. your overall loan balance minus your offset account balance). In other words, the loan ‘thinks’ you’ve paid that money off your loan already, reducing the interest charged accordingly. It’s in your interest (pun intended) to put as much of your savings away into that account as possible!
  • Refinance – talk to a reputable home loan broker or your bank about refinancing your home loan. You may find you’re eligible for a lower rate loan or a revised loan term. While a shorter loan term will mean higher repayments now, you’ll spend less over the life of the loan.
  • Put it away – consider any bonus, tax refund or inheritance as ‘heading straight to the pool room’. If you can shift your perspective from seeing these lump sums as a chance to splurge, putting them straight on your home loan will give it a great boost and help to cut costs in the long term.

Whichever you choose, you’ll find paying off a bit more or reducing the length of your loan will help to cut down its cost. If you’re interested in refinancing or talking to us about how you can reduce the cost of your home loan, send us an enquiry or call us today.



The information on this page is of a general nature and is not intended to be a substitute for personal advice. This information has been produced without taking into account your personal financial circumstances, objectives or needs. You should consider the appropriateness of the information to your financial situation and seek personal advice before acting on any of this information. Qudos Mutual Limited trading as Qudos Bank ABN 53 087 650 557 AFSL/Australian Credit Licence 238 305.

Published July 2017