Step-by-Step Home Loan Interest Minimisation Strategy
Minimising interest on a home loan is the best strategy you could ever apply if you are currently the holder of a mortgage.
Let’s face it, paying off a home over 25 or 30 years is no small feat. generally we end up paying back double the cost of our homes by the time our term has matured. Half is the initial cost of the home while the other half is made up of the compounding interest costs over the term of the loan.
The importance of paying off your home loan fast!
In order to save many thousands of dollars you want to use a strategy to pay off your biggest debt in life – a mortgage – as fast as possible. In doing so you’ll save a big chunk of money that can otherwise be used to design a better lifestyle.
The following step by step process will help you to minimise your interest:
Step 1: Choose to use a transaction loan, also called an offset account: This loan usually has a credit limit that is either fixed or an amortisation schedule for the term of your loan. Many Australian banks offer you offset loans these days.
Such a loan will allow you to offset all of your bank savings which in term will reduce the interest you pay on your loan.
Step 2: You deposit your income directly into the offset account which reduces the balance of your loan immediately. Because interest rates are calculated daily on your loan the amount of interest you need to pay is instantly reduced.
Step 3: You’ll link a 55 day interest free credit card to your transactional or offset loan and use the card to purchase everything from groceries to paying for your monthly utility bills. Instead of paying cash or using a debit card while out buying things, get used to using your credit card all the time.
Step 4: The key here is to PAY OFF your card in full EACH MONTH. This means you’ll never pay interest on your credit card. Plus all the money paid extra into your offset loan account can actually be redrawn at any time for emergencies, leaving you always with options for much-needed cash.
This strategy alone will save you a LOT of money.
Step 5: By combining a 55 day free interest credit card, using the card for everything you buy and depositing your wages into the offset account you can take a massive chunk off your loan. With some good money management and a budget you can pay off your home loan within a few short years opposed to 30 years.
Just imagine how much money you’ll save in the process! Minimise your interest with these tips and you’ll soon be a real home owner. Speak with your bank first to see what package they can offer you in regards to offset accounts.
Check out our home loan comparison page for the best deals on Australian home loans and mortgages
Related posts:
- Switching Home Loans – A Step-by-Step Guide
- ING Smart Home Loan
- Home Loan Health Check Guide
- Bank of Queensland Home Loan Privileges $200k to $250k
- Home Loan Features
- Save $64,000 On Your Home Loan With Ease
- Bank of Queensland Home Loan Privileges Package $250k (fixed)
- How To Save Money On Home Loan Interest Payments
- Using a Combined Account to Repay your Home Loan Faster
- What features help repay a home loan faster?
Top Home Loans
| Home Loan | Details | Interest Rate (p.a.) | Comp Rate^ (p.a.) | App Fee / Ongoing Fee | Max LVR | Min & Max Borrowing | |
|---|---|---|---|---|---|---|---|
 Loans.com.au - Dream Catcher​ | A home loan offer with a $0 application fee and one of the lowest available home loan interest rates. | 5.85% | 6.21% | $0 / $375 | 80% | $50,000 / $750,000 |
 
|
 Bankwest Online Home Loan | A low interest rate home loan with a $0 application fee and ongoing maintenance fees. This offer is exclusively available by applying online. | 5.97% | 5.97% | $0 / $0 | 80% | $100,000 / $1,000,000 |
|
 Illawarra Home Loans Bank Beater Home Loan | A low variable rate, beaten down even further by 0.05% p.a. after 5 years. | 6.07% | 6.35% | $0 / $345 | 90% | $250,000 / $1,000,000 |
|
 State Custodians Mortgage Company Standard Variable Offset Loan | Awarded the 2011 Non bank Lender of the Year this feature-packed loan rewards customers with a bonus rate drop of 0.25% after 5 years. | 6.02% | 6.23% | $0 / $345 | 95% | $150,000 / $1,000,000 |
|
Ask A Question