6 Hacks for Your Home Loan in Australia

6 Hacks for Your Home Loan in Australia

If you’re like most Australians, chances are that one of the bigger downsides of owning your home is the debt that it carries.

You’re going to need to get used to this feeling, though there are a few things you can do and a couple of changes you can make to hack your home loan and speed up your repayment process — cutting back on some of this stress.

Of course, these tips won’t shave a decade off your home loan, though reducing repayments and shortening your repayment timeframe just a tad takes a whole lot of stress off your plate.

With that said, here are our hacks for your home loan in 2021.

1. Refinance, But Keep Repayments the Same

We’re kicking things off with one of the more helpful tips considering rates have flattened following the emergence of COVID-19.

You’ll want to move forward and look for home loans that have better interest rates for your borrowed amount and look to refinance to these. However, you’ll want to make sure that you don’t change your repayment amount!

If you can find a home loan interest rate that is a few points lower than your current one, give the bank a call and work on switching over. To add to this, if you refinance without changing your repayment rate, you’re reducing the amount of time you’ll be paying your loan back.

That in mind, you’ll be cutting down the time you’re in debt and be on your way to owning your home outright a little quicker.

2. Consider Making Extra Repayments

One of the more obvious tips on our list, though one that many of us skip over, is making a few additional repayments on your loan. It’s highly recommended that you make this choice from time to time in that you’ll be able to slowly chip away at your debt faster.

With that in mind, many of our readers struggle to see an avenue to make extra repayments on their loans, so for a bit of help, we suggest using things like your tax returns or even your work bonuses to funnel into your home loan.

If you have assets or simply just household items and appliances you no longer make use of, consider selling these off for some added cash to redirect into your home loan.

In all, you’ll be better off in the longterm doing this, and it could become an annual tradition to work on offloading a few of your depreciating assets to use to fund your home loan repayments.

3. Consider a Weekly or Fortnightly Payment Plan

To our third tip, you’ll want to consider the weekly or fortnightly payment plan.

We offer this tip in that weekly and fortnightly payments are going to ultimately result in you making an extra monthly repayment each year. With that in mind, you will be shaving that extra month’s repayment off your home loan each year and getting ahead of your home loan’s repayment timeframe.

A few lenders in Australia offer these payment terms, and you can take a look at some more information here on home loans to understand which type of repayment is best for you — and how much it might be if you’re looking to refinance.

4. Stray From Interest Only

One of our biggest tips is to keep interest-only home loans at bay.

These are the home loans where you’ll only be required to pay interest amounts until a set timeframe, and then be required to pay back the larger loan amounts.

We understand that to a lot of our readers, these types of home loans look quite attractive, though when it comes to paying off the loan in the long term, there isn’t too much of a benefit here, nor are there reduced total repayment amounts.

5. Consider Using Offset Accounts

For those unaware, offset accounts work in a similar way to a savings account, however, they’re linked directly to your home loan.

That in mind, these accounts have the ability to shave down your loan interest fees given that you have the money in the savings account, which holds off the total size of the home loan.

For example, if your home loan has $350,000 remaining, and you have $50,000 in your offset savings account, your lender is only going to charge interest on your remaining $300,000 home loan.

A fantastic way to cut back on interest.

To add, these offset account funds are still accessible to you, which means they’re not locked away or part of the home loan repayments. You can withdraw these funds to pay bills or to use as an emergency fund for example.

That in mind, making use of offset accounts is a fantastic way to reduce your interest and also to keep your home loan payments to as low as possible.

6. Consider Cutting Back Your Repayment Term

Our final tip here is great to consider if you have the means to repay a little more.

When you work on refinancing your loan at a lower interest rate, you can also request your payment term to be reduced. That in mind, you will be charged a little more for your monthly, fortnightly or weekly repayments, though you will be getting on top of your loan a whole lot faster.

This is, in fact, our top tip for those who have an increased salary or income now when compared to the day you first applied for your home loan. Your higher salary can be helpful in cutting down your repayment term and getting that home loan over and done with a lot faster.

As an example, a typical home loan with a 30 year repayment term may have been the product you accepted from your bank. You can refinance to a lower interest rate, request that your term be shortened by 3 or 5 years, or more, and save on your repayments and your overall time spent repaying the loan.

To end, there are always avenues to ‘hack’ your home loan and save a little here and there, though you should always work to plan ahead and be as pedantic about your finances as possible. Of course, daily life’s expenses might be a top priority, but setting aside a little more cash and making your home loan a central focus for your income is a great way to tackle your finances and save some money on your home loan.


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