Options for paying off your home loan sooner



Feb 16, 2012( 2 min read )

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We all want to slash years and money off our home loans, while also avoiding a significant whack in additional interest repayments. The good news is that there are many home loans offering the flexibility to make regular, additional repayments and/or lump sum payments to help you reduce your home loan faster.


Apart from extra and lump sum payments, features such as ‘redraw’ facilities and ‘mortgage offset accounts’ can shave years off the term of the mortgage and slash interest repayments. Likewise, ‘bundling’ a home loan with a credit card may also save time and money.

Redraw facilities

Making extra repayments into your home loan trims the interest you will pay over the term of the loan. However a ‘redraw’ facility gives you access to these additional payments should you hit a financial speed bump such as a medical condition or a job loss. The RateCity mortgage payments calculator lets you compare home loans with redraw facilities.

Mortgage offset accounts

A mortgage offset account is like a transaction account that is linked to your home loan. This enables the money in your transaction account to be offset against the balance of your home loan, so you only have to pay interest on the balance. For instance, if you have an outstanding balance on your mortgage of $200,000 and your offset account has $20,000 in it, you will only pay interest on $180,000 ($200,000 – $20,000). There are also tax benefits attached to mortgage offset accounts that you should discuss with your accountant.

‘Package’ loans

It’s possible to bundle a home loan, credit card and transaction account into a ‘package’ loan and save money. Not only will this deliver banking convenience, but customers can also potentially earn a discount on the interest rate attached to their home loan, while fees such as loan establishment fees and credit card account fees are often scrapped.

The rub with a package loan is the annual fee – usually a few hundred dollars.

Compare thousands of Australian home loan options by conducting a home loan comparison online. Use the home loan repayment calculator to crunch the numbers and find out how much you could potentially save.


^Words such as "top", "best", "cheapest" or "lowest" are not a recommendation or rating of products. This page compares a range of products from selected providers and not all products or providers are included in the comparison. There is no such thing as a 'one- size-fits-all' financial product. The best loan, credit card, superannuation account or bank account for you might not be the best choice for someone else. Before selecting any financial product you should read the fine print carefully, including the product disclosure statement, fact sheet or terms and conditions document and obtain professional financial advice on whether a product is right for you and your finances.

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