Skip the introductory rate (Honeymoon)

You are initially offered a cheap rate on your loan to get you in the door but once the honeymoon period is over, the lender will switch you to a higher variable rate of interest. There are all sorts of strategies for paying less interest on your loan, but most of them boil down to one thing: Pay your loan off as fast as you can. This equates to a total repayment of $682,632 over the term of your loan.

If you pay the loan out over 15 years rather than 30, your monthly payment will be $2,613 a month (ouch!). Get a loan at the lowest interest rate you can and add 2 or 3 points to your repayment amount. So if you have a loan at about 6.5 percent and pay it off at 10 per cent, you won’t even notice if rates go up. Extra lump sums or regular additional repayments will help you cut many years off the term of your loan.

Ask your lender if your occupation qualifies you for any discount.

One of the best ways of ensuring you continue to pay off your loan quickly is to protect yourself against interest rate rises. If your home loan rate starts to rise, you can be absolutely positive about one thing – your personal loan rate will rise and so will your credit card rate and any hire purchase rate you may happen to have.

This is not a good thing as the interest rates on your credit cards and personal loans are much higher than the interest rate on your home loan. Many lenders will allow you to consolidate – re-finance – all of your debt under the umbrella of your home loan. This means that instead of paying 15 to 20 per cent on your credit card or personal loan, you can transfer these debts to your home loan and pay it off at 7.32 per cent.

Split your loan

A good compromise is a split loan, or combination loan as they are often known, which allows you to take part of your loan as fixed and part as variable.

If interest rates rise you will have the security of knowing part of your loan is safely fixed and won’t move. However, if interest rates don’t go up (or if they rise only slightly or slowly) then you can use the flexibility of the variable portion of your loan and pay that part off more quickly.

Make your mortgage your key financial product

If you are only able to make the equivalent of the minimum repayment on your loan (and not put in any extra) you may be better off with a cheaper standard variable or basic variable loan. If you are careful, you can use this equity to your advantage and help to pay off your home loan sooner.

Using an equity loan to improve your property could be a good way to ensure that your home increases in value over time. If you have a loan that is tricked up with all the features, or even if you have a standard variable loan, you might find that you could get a no frills rate that is as much as a percentage point cheaper than your current loan.

For example, there may be exit fees payable on your old loan and establishment fees and stamp duty on your new loan. Stay informed – don’t forget about your mortgage Visit Mortgage Loan /P>
Try getting the cheapest home loan you can find and make the minimum repayment.

Instead of earning interest, any money you have in your offset account works to offset the interest you are paying on your home loan.

Of course, the best sort of offset account pays the same rate as your loan (100 per cent offset).

Pay all your mortgage fees and charges up front

If you do this, you will be one step ahead of the lender for the term of your loan. Make sure your loan is portable

Choose the loan that suits your needs

Choosing a loan is about knowing what you want. Taking out an interest only loan suitable for investors if you are planning to live in the house is just foolish.

Ditching the features you don’t need can save you up to 1 per cent on the interest rate of your loan.

18 Ways to Reduce Your Mortgage Loan