It’s lucky Aussie homeowners are a pretty resilient bunch.

All the interest rate rises over the past couple of years have delivered a serious reality check, leaving variable rate home loans higher than they’ve been for a generation.

So you need to get your home loan working as hard as possible particularly if your fixed rate loan is about to reach the end of its term and you’re facing a sudden increase in repayments.

The good news is there are ways you can set up your home loan to pay less interest in the long run and take years off your mortgage. Here are a few quick tips to get your home loan working harder.

1. Set up an offset account 

If you haven’t already, check if you can link an offset deposit account to your home loan. An offset account operates like a transaction account but it reduces the interest you pay as interest is only charged on the mortgage balance less the offset balance.

You can set up offset accounts for big ticket items like holidays, a car purchase or renovations or even everyday necessities like shopping and bills.

The combined balance of all your offset deposit accounts will reduce the interest payable on your loan. You can also connect a visa debit card to your offset account that operates like an everyday account and makes it easy to withdraw your funds.

2. Take advantage of your redraw facility

Some home loans offer a redraw facility to access extra repayments you might have made. If you have unexpected expenses, it’s worth checking if you have available funds on your home loan that you could request to redraw. You’ll just need to remember this could extend the life of your loan so you end up paying more interest in the long run.

3. Consolidate other debt into your home loan

You’ll generally find the interest rate on your home loan is lower than the interest on your credit cards or personal loans. So if you have any debt, you could transfer this to your home loan so you don’t pay as much overall interest.

4. Change your repayment amount

Creating a budget could help you get across how much income you’ve got coming in, how much you need for the essentials and where the rest of your money might be going. This will help you identify if there’s any room for movement and if you could potentially repay a little extra. 

5. Change your repayment frequency

Paying fortnightly instead of monthly, for example, can make a big difference to the interest you pay in the long run.

6. Change your repayments to principal and interest

Making principal and interest (P&I) repayments can reduce your outstanding loan balance and lower the amount of interest you’ll pay over the life of the loan. But don’t forget switching to P&I can increase your regular repayments.

7. Renegotiate your interest rate

If you see a lower rate with another provider,  contact your current provider for a better deal.

8. Consider whether to refinance

If you’re having cashflow challenges, you could think about refinancing to reduce your repayments but bear in mind this could mean extending your loan term.

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