The following examples are based on a $250,000 home loan at 7% p.a. for an initial term of 30 years.
Make your loan repayments fortnightly instead of monthly
If you currently make monthly repayments on your loan, you could pay half that amount each fortnight instead, meaning you make two extra repayments per year – this reduces the amount you owe and you’ll pay less interest on your mortgage too.
Based on the example above, a $250,000 home loan at 7% p.a. for an initial term of 30 years, paying half your minimum monthly repayment each fortnight could save you over $85,000 in interest costs and you’d pay off your loan 6 years and 4 months earlier.
Find out how you could reduce your regular loan repayments with our Fine Tune Your Home Loan calculator.
Increase your regular loan repayments
Every little bit helps. If you have any extra money to put towards your loan repayments, even a small amount can knock years off your home loan and save you thousands of dollars.
Just paying an extra $50 a fortnight above the minimum repayment on a $250,000 loan at 7% p.a. with a 30-year term will mean you pay off your mortgage almost 5 years earlier. With a fixed rate you're able to increase your regular repayments to a maximum of 20% of your initial repayment set in your home loan contract.
Shorten the term of your loan
Reducing the term of your loan means your repayments will increase and you’ll pay off your loan faster, reducing your overall interest payments.
Switching a $250,000 loan from a 30-year term to a 25-year term could save over $69,000 in interest costs, based on an interest rate of 7% p.a. and monthly repayments.
Pay lump sums off your loan
If you've saved up or received a lump sum, using this to reduce the outstanding balance on your home loan could reduce the time it takes to pay off the mortgage and reduce your overall interest costs.
Paying $15,000 off a $250,000 loan could reduce the loan term by almost 5 years and save over $20,000 in interest costs. This is based on an interest rate of 7% p.a., monthly repayments and a 30-year initial term.
Just remember, there could be a break cost if you pay back all or part of your fixed rate loan during a fixed period. You can arrange to pay a lump sum at the end of a fixed rate term without break costs.
The above scenarios are demonstrative examples only and do not take into account your personal situation or goals. Every loan transaction differs, so please feel free to contact us to review your specific loan situation.
Find out more about break costs
Keep your monthly repayments the same when your interest rate drops
This means more of each payment will go towards repaying principal; reducing your outstanding balance faster and helping you save on your overall interest costs.
Think about a revolving credit account
With a revolving credit facility like our Choices Everyday account, when you pay your salary or wages into your home loan account your loan balance goes down meaning you pay less interest.
What's more, if you begin using your Westpac credit card for everyday purchases instead of using the money in your revolving credit account, you'll be leaving your money in that account for longer, helping keep your loan balance lower too. Just make sure you pay your credit card balance off in full when it's due (you'll have up to 55 days interest free with our credit cards).
Read more about Choices Everyday
Change your home loan to Choices Offset
When you get set up with Choices Offset, you’ll only pay interest on the difference between the credit balance of your eligible Westpac transaction and savings accounts, and your home loan. This could save you thousands on your interest repayments and cut years off your home loan.
Read more about Choices Offset