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Six ways to manage your mortgage and save money

If you manage your finances well, your mortgage repayments will sit comfortably within your budget for the term of the loan. Don’t get too comfortable. Aiming to pay off your mortgage sooner, will save you a lot of money.

Making small adjustments when you’re paying off your loan, will make a big difference to the amount of interest you end up having to pay on what you’ve borrowed.

Getting really good at budgeting will help you pay off your mortgage sooner says Shaun Massie, Director of

“As your income changes over the term of the loan, make sure that you adjust your budget accordingly. If a promotion or new job means you are now bringing home more money each fortnight, direct the extra funds into your mortgage,” he recommends.

These six proven repayment tweaks can help you better manage your mortgage, sooner.

Make fortnightly repayments

Committing to fortnightly home loan payments means you pay off more of what you owe over a year, than if you pay monthly. It equates to 13 payments off your loan in a year, instead of 12.

While one extra payment may seem immaterial against the total amount you have borrowed, every extra dollar paid off a home loan, results in cumulative savings over the life of the loan.

Set your budget, review, reset your budget, review…

Hone in on where you are spending your money by keeping a diary of expenses for at least one financial quarter. Include your mortgage repayments. Identify spending that is superfluous and start cutting back.

Set your new budget, and stick to it. Review and refresh your budget at least annually.

Automate your repayments

Set up your repayments to your home loan account through a direct payment from your salary. An automated direct debit ensures your repayments will always be on time. But don’t set and forget. As you regularly review your budget, adjust the payment from your salary so you can pay off your home loan sooner.

Direct your salary into an offset account

An offset account linked to your loan account will help reduce the interest on your loan. Operating like a savings transaction account, 100% of your salary will then be offset against the loan balance, daily.

Allocate extra funds to your home loan

If market conditions are favourable to your lender dropping your home loan interest rate, don’t be tempted to reduce your loan repayments. Take advantage of the fact that paying more than the minimum payment will pay down your principal, sooner.

If a salary bonus, tax refund or cash inheritance is due to you, pay the extra funds into your mortgage. While you may be charged a fee for making additional payments, the longer term savings will be worth it.

Stay in touch with your mortgage broker

Your mortgage broker is a valuable source for helping you find solutions to restructure your repayments, or look into consolidating other debts into your home loan if your financial situation gets tough.

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