Family Budget

How to save on your home loan

How to save on your home loan

Paying off your home loan faster may seem like a pipe dream. But don't despair - there are lots of money-saving tips that'll help to reduce your mortgage and save thousands of dollars in interest.

Get the best deal

If you've just started to look for a home loan, gather as much information as you can from banks, credit unions and building societies.

It's worth putting in the time to find a loan that suits your financial circumstances because it could save you a lot of money in the long run.

Important questions to ask about your home loan

  • Interest rates - Is there a low introductory rate available? What about fixed or standard variable rates?
  • Home loan features - Do you need a no-frills home loan or one that has extra features which may cost more?
  • Professional packages - Is it worth paying an annual fee to get an interest rate discount?
  • Fees and charges - What are the costs of getting a loan? What if you pay the loan off early? Or if you want to switch banks?

Check with your existing bank to see if they can match or better any offers you are considering.

A mortgage broker may be able to negotiate a better deal but make sure they're upfront about the commission they'll get.

Pay more than the minimum required repayment

When you first take out a home loan, it's a good idea to regularly pay extra money - whether it's $10 or $100 - off your mortgage.

It's also worth putting bonuses, tax returns and monetary gifts plus any other unexpected financial windfalls onto your mortgage. Making these extra repayments will save you money over the life of the loan. You'll make a bigger dent in the loan, reduce the amount of interest charged and pay the debt off faster.

Make more frequent repayments

Save money by making your home loan repayments fortnightly - or even weekly - instead of once a month.

Making fortnightly repayments will result in paying an extra full month's worth of money over the course of the year.

If home loan rates fall, keep paying the same mortgage repayments

When interest rates fall, it can be hard to resist dropping your mortgage repayments too. You'll save money - by reducing the amount of interest you pay - if you keep them at existing levels.

Consider moving your loan to a different lender

You may be able to save money by switching to another loan or even another lender - but do your research because sometimes the costs can outweigh the benefits.

For example, if interest rates are on the way down - and you're paying a higher fixed rate - investigate re-financing to take advantage of the lower rates that are available.


Most lenders will hit you with fees and charges - which can add up to thousands of dollars - if you want to get out of your existing home loan contract before it's finished.

Everyone's situation is different - so make sure you read the fine print about exit fees to decide if it's really worth it.

Regularly review your home loan

Don't neglect your home loan! Every so often check to see if you're still getting the best deal.

Find more family finance related articles and information

This article was created for Kidspot, New Zealand's leading parenting website. Sources include Fido, Info Choice and Canstar.