So you didn’t get a rate cut? Here’s 3 ways to save on your mortgage

The Reserve Bank of Australia may have left the cash rate unchanged but there are still ways you can get ahead when it comes to paying off your home loan efficiently.

Looking to make a dent in your mortgage? Here are three quick ways you can make a difference.

Utilise your offset account

You can shave years off your home loan by holding your savings in an offset account and reducing the amount of interest you pay. Many lenders offer offset accounts as a feature with variable home loans, which makes it a popular option.

An offset account can also be used as a regular transaction account for your day-to-day expenses, with all interest payable on your mortgage calculated on the loan balance, less funds held in the account. Confused? Imagine you have a home loan of $500,000 and $10,000 in savings. If that $10,000 is sitting in your offset account, your home loan interest will only be charged on $490,000 of your loan.

Offset accounts are typically with your home loan provider, though some do allow you to link offset accounts from other financial institutions.

Change up when you pay

Paying off your mortgage faster can have a huge impact on the amount of interest you will have to pay over its life. Your home loan is likely the biggest debt you will ever have, but an easy switch in how you pay it back could make all the difference.

If you’re making monthly repayments on your mortgage, consider switching to fortnightly. There are 26 fortnights per year, compared to 12 months, which means your payments add up faster. This is often called ‘accelerated payments’.

Let’s say your mortgage repayment is $2500 a month.Twelve monthly payments will mean you pay off a total $30,000 per year. If you pay fortnightly however, you will be making payments of $1250 per fortnight. This adds up to $31,250 per year. Not all lenders allow fortnightly repayments, but it’s worth asking the question if your household budget allows.

Touch base with a broker

Even though the cash rate hasn’t changed, home loan offers are constantly shifting. If you’re looking for a different approach to managing your loan, or looking for ways to pay it off more quickly, always speak to a broker to see what your options are.

It could be a quick change in how you pay (monthly to fortnightly) or it could be refinancing your loan.

Whatever the next best step is for you, a broker can lay out all the options and help find the best fit for your situation.

This article first appeared on Mortgage Choice and has been republished with permission.

The post So you didn’t get a rate cut? Here’s 3 ways to save on your mortgage appeared first on realestate.com.au.