Home Loan Repayment Tips
Tip 1: Pay off your mortgage as quickly as you can
One of the simplest ways to save money on your mortgage is to pay it off as quickly as you can. The longer you take to pay off the loan principal, the more interest you’ll end up paying along the way, and the higher the overall cost of your loan will be.
Tip 2: Think about the way you make repayments
How you actually make repayments can have a huge effect on the overall term and cost of your loan.
- If your loan has the flexibility to allow increased regular repayments and lump sum repayments without incurring additional fees or charges, take advantage of it whenever you can.
- Make more frequent repayments – such as weekly or fortnightly. In both cases, you’ll actually be making the equivalent of 13 monthly repayments each year, saving you money by reducing the principal and therefore the interest you’ll pay over the term of your loan1.
Tip 3: Deposit any spare cash into your loan as soon as you can
Extra repayments at any time help reduce the time and interest cost of your loan. But for maximum time and interest savings, you should make extra repayments earlier rather than later, to take advantage of the effect of compounding interest over time. However, you should consider any additional fees or charges you may incur by making additional repayments if you have a fixed rate loan1.
Suncorp Bank’s Cashback redraw facility can also give you the added flexibility of being able to access the equity in extra repayments when you need it2.
Tip 4: Align your loan repayments with your income cycle
This strategy allows you to keep as much money as possible on your loan at all times. Leaving extra money in your loan for just a few days each month can have a substantial effect on the interest you pay, and the overall term of your loan.
Set up your repayment periods with the same regularity as you get paid – so if you get paid fortnightly, make fortnightly repayments on your home loan. By structuring repayments this way, you will always be in a position to maximise the amount of money paid against your home loan. All Suncorp Bank home loans give you the option of making weekly, fortnightly or monthly repayment periods.
Tip 5: Don't lower your repayment
If your minimum regular home loan repayment drops because interest rates fall, don't lower your repayment.
By maintaining your current repayment, you’ll pay off your loan a lot sooner. Using this strategy, you’re effectively making regular extra repayments, because you’re paying more than the minimum monthly requirements each month. And as you’re used to paying this amount already, you won’t even notice.
Tip 6: Use an offset account to help knock years off your home loan
A Suncorp Bank Standard Variable Rate Home Loan comes with the option of a 100% Home Loan Offset facility (utilising an Everyday Options account) that enables you to use your income and savings to reduce your loan interest3.
1 For Fixed Rate Home Loans, an Early Payment Interest Adjustment (EPIA) applies if more than the prepayment allowance (currently $499.99 per month) is paid in excess of the agreed monthly repayment. The EPIA also applies if the loan is repaid in full or the agreed fixed rate period is broken for any reason. EPIA applies to the whole amount prepaid. For more information on EPIA ask in branch for our EPIA brochure.
2 Terms and Conditions apply for Cashback. Minimum withdrawal amount is $1000. One free Cashback transaction per calendar month. The Cashback Fee will be charged then refunded to your account. A Cashback Fee applies for subsequent transactions. Cashback is only available while on our Standard Variable or Back to basics loan products.
3 A once off mortgage offset fee applies. The Everyday Options account is issued by Suncorp-Metway Ltd ABN 66 010 831 722. Please read the relevant Product Information Document before you make any decisions regarding this product. Contact us for a copy.
Home Loans are provided by Suncorp-Metway Ltd ABN 66 010 831 722 Australian Credit Licence 229882 (“Suncorp Bank”) to approved applicants only. Terms, conditions, fees and charges apply and are available upon request.