Even with a pause in rising interest rates and a drop in inflation, the 2024 mortgage world is a tricky one for home buyers, including investors.

With the official cash rate now standing at 4.35%, home buyers who've chosen a variable rate home loan may be at the end of their tether, while those on a fixed home loan may be struggling with even higher rates.

However, in good news for homeowners, there are ways to stay ahead - or at least on top of - your mortgage repayments and thus, decrease the life of your loan.

1. Make weekly repayments

By making 52 repayments every year, rather than 12, your mortgage life can decrease by several years or more in total - and certainly means you've paid an extra month's worth of payments without even realising it.

How?

A week always equals seven days but a month can equal 31, 30, 28 or (in the case of last month) 29 days.

Another great reason to make weekly repayments is that home loan interest is calculated daily, and (usually) paid monthly.

Paying off your mortgage in small weekly "bites" will therefore lower your interest payments as well - which can add up very fast, especially on a new mortgage and even if this mortgage is very small.

NB: according to moneysmart.gov.au, in the first five to eight years of a typical 25-year principal and interest mortgage, the majority of repayments will go towards repaying interest.

Sad but true.

2. Make regular overpayments

Of course, this can be much harder than it sounds, but again, it will literally pay off in the long run.

Even homeowners with a fixed home loan can organise repayments of up to 5% above the initial fixed amount (depending on the lender) without incurring an extra fee.

And those on a variable loan can certainly make higher, or extra, repayments without dramas.

3. Sweat the small expenses

On this note, first-home buyers, and older first-home buyers in particular, will quickly realise that holidays and take-away dinners fade in comparison to the urgent need to repay a mortgage tout de suite.

Even an extra $20 per week in repayments can add up fast in the best of ways.

So toss out the daily cafe coffees and put those funds towards your mortgage, along with all bonus wages, tax return refunds and similar lump sum "gifts".

You'll mourn such purchases now but the future, older you will thank you for such financial sacrifices.

4. Set up offset accounts and redraw facilities

These two possibilities are another easy way to decrease the life of your loan.

As we've explained in the past, offset accounts are a savings account linked to your home loan.

So, all cash you withdraw or deposit in your offset accounts affects your home loan.

In other words, the more funds in your offset account, the less interest you'll need to pay on your home loan principal.

A redraw facility allows you to redraw - or take back - any extra repayments homeowners make on the home loan, which could be needed in emergency or other situations.

But in a similar way to offset accounts, the funds in a redraw facility will also positively affect your home loan principal by lessening the interest on this figure.

NB: most fixed-rate home loans don't offer redraw facilities. 

5. Explore refinancing options

Whether the end of your fixed-rate loan is looming or you're simply not happy with your variable loan, any time can be a good time to explore refinancing opportunities.

Refinancing simply means switching your home loan to another lender or switching to another home loan option with the same lender.

Either way, refinancing is a simple way to again, lessen the life of your loan.

6. Monitor money matters

Even if you're on a fixed-rate loan, you should never ignore the Reserve Bank of Australia's regular cash rate announcements.

Neither should you ignore the Australian Bureau of Statistics' Consumer Price Index (CPI) figures, with this monthly and quarterly data being a crucial measure of the nation's inflationary situation.

While you're at it, keep an eye on real estate property prices and sales in your area and across the country, including the rental situation.

We're here to help

Whatever home loan road you wish to take, Lending Loop would love to help you travel it!

We’ve brought all the services you need together and we can help you refinance your loan to help you keep more money in your pocket.

So, give us a call today at Lending Loop.