Even little changes you make now to reduce your home loan interest can have a big impact on how much you end up saving on your mortgage – and the time it takes to pay it off. Find out how.
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How to pay off your home loan faster
1. Make weekly or fortnightly repayments, instead of monthly
This is a good way to save on home loan interest with minimal effort.
Here’s the maths behind it. Interest is calculated daily and raised monthly on your due date every month. If you split your monthly repayments into two fortnightly repayments, or even four weekly repayments, you’re making repayments on your loan more frequently. This means the balance we calculate your interest on every day will be lower.
An added bonus for anyone who gets paid weekly or fortnightly is that your loan repayments can be more aligned to your pay cycle, which can help when budgeting.
Keep in mind that if you’re paying interest only on a Bankwest home loan, you can only make monthly repayments.
2. Use a mortgage offset account
An offset account is a bank account that’s linked to your home loan. You can use it like any normal transaction account, but the balance in it ‘offsets’ the amount you owe on your home loan. The interest you pay on your home loan is calculated on this reduced amount. The more you have in your offset account each day, the more interest you could save.
Some benefits of our offset accounts
- You can link up to nine of them to a range of our home loans, which can help you manage your money
- You can get a Debit Mastercard® with each offset account, so you can easily and regularly access your money.
Keep in mind
- While no monthly offset fees apply if you have an eligible Complete Home Loan Package, they may apply to each offset account with our other home loans – be sure to check your home loan T&Cs.
See some tips to help you make the most of an offset account.
3. Make extra repayments
The more you pay off, the less interest we’ll charge on your home loan. Even if you make a small extra repayment to your loan every week, the savings can be huge. But don’t just take our word for it – crunch the numbers yourself on our extra repayments calculator to see how much money and time you could save by paying more off your home loan.
What’s more, with a Bankwest home loan, you can access your extra repayments if you need money down the track – also known as redraw.
Some benefits of making extra repayments on our home loans
- It could suit you better than using an offset account if you want to save on monthly offset fees that may apply depending on your home loan (for example, if you don't have an eligible Complete Home Loan Package)
- You can make unlimited extra repayments with our variable rate home loans
- With our variable rate loans, you can redraw through the Bankwest App, online banking, submitting a form online, sending a form to us by mail or fax, or by taking it to a branch.
Keep in mind
- Our fixed rate loans let you make extra repayments up to a set amount each year
- An offset account might suit you better if you’d prefer to access your money more regularly
- With our fixed rate loans or for loans requiring two or more people to authorise changes or payments, you won't be able to redraw through the Bankwest App or online banking
- Redrawing your extra repayments means that that money will no longer be reducing the interest on your home loan.
4. Consider changing your loan conditions
Have a home loan health check
Things may have changed since you first opened your home loan, so reviewing it could mean you get a better interest rate, or more flexible features to help you save money long term. Our Home Lending Specialists might be able to help you out – find out more.
Consider splitting your loan
If you’re worried about fluctuating interest rates, you could choose to fix a portion of your home loan for an agreed term (of one to five years) while keeping the rest variable for extra flexibility. One great benefit of a fixed rate loan is that your repayments won’t change for the entirety of the fixed term, which could help you to budget.
Our Complete Fixed and Complete Variable Home Loan Packages let you split or switch between fixed and variable any time with no transfer fee. Keep in mind that other fees and charges, such as break fees on a fixed rate loan, may apply.
Our Home Lending Specialists can help you work out if splitting your loan is the right option for you.
Keep reading
If you’re juggling multiple debts, one way to simplify your finances is to bring all your loans together.
Find out the ins and outs of redrawing your extra repayments.
Common (but confusing) home loan and home buying terminology explained in plain English.
Ask an expert
Get in touch with a Home Lending Specialist, and they’ll respond within one business day. You can talk on the phone, meet at a branch, or have a Mobile Lending Manager come to you.
Lending and eligibility criteria, and fees and charges, apply for our home loans. The Complete Home Loan Package consists of an eligible home loan, one optional eligible credit card per customer and up to nine optional Offset Transaction Accounts per loan.
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The information contained in this article is of a general nature and is not intended to be nor should it be considered as professional advice. You should not act on the basis of anything contained in this article without first obtaining specific professional advice. Also to the extent permitted by law, Bankwest, a division of Commonwealth Bank of Australia ABN 48 123 123 124 AFSL / Australian credit licence 234945, its related bodies corporate, employees and contractors accept no liability or responsibility to any persons for any loss which may be incurred or suffered as a result of acting on or refraining from acting as a result of anything contained in this article.