How can I maintain my lifestyle and own my home sooner?

Answer

There’s no getting away from it. Your home loan can feel like a substantial burden.

So it’s understandable if you want to get on top of your property debt. And it’s possible. Just because you’ve got a 30-year loan doesn’t mean you need to take 30 years to pay it off.

 

But can you pay off your home loan faster and maintain your lifestyle? Yes, there are some small things you can do that can make a big difference to your home loan without too much impact on your day-to-day lifestyle.

Understand your home loan

The first step towards paying off your home sooner is to understand your loan—how much you owe, how much you are paying and what other debts you have.

Use our debt reduction calculator to get a clearer picture.

Consolidate your debt

Over time, it’s easy to build up small debts. This could mean you’re paying higher interest rates and extra fees, which can keep you in debt for longer and impact your lifestyle. By putting all your debts into a home loan with a lower interest rate, you can get a clearer picture of what you owe and potentially save money too. Learn more about paying off debt.

Make fortnightly repayments

If you can afford it (and you’re not doing it already), consider increasing your home loan repayments from monthly to fortnightly. This small change can make a really big difference to your loan.

For example, say you’re making monthly repayments of $1,922 off your $350,000 home loan, with an interest rate of 5.20% per annum. If you continue to make repayments monthly, it will take you 30 years and cost you a total of $691,879.

But can you pay off your home loan faster and maintain your lifestyle? Yes, there are some small things you can do that can make a big difference to your home loan without too much impact on your day-to-day lifestyle.

Understand your home loan

The first step towards paying off your home sooner is to understand your loan—how much you owe, how much you are paying and what other debts you have.

Use our debt reduction calculator to get a clearer picture.

Consolidate your debt

Over time, it’s easy to build up small debts. This could mean you’re paying higher interest rates and extra fees, which can keep you in debt for longer and impact your lifestyle. By putting all your debts into a home loan with a lower interest rate, you can get a clearer picture of what you owe and potentially save money too. Learn more about paying off debt.

Make fortnightly repayments

If you can afford it (and you’re not doing it already), consider increasing your home loan repayments from monthly to fortnightly. This small change can make a really big difference to your loan.

For example, say you’re making monthly repayments of $1,922 off your $350,000 home loan, with an interest rate of 5.20% per annum. If you continue to make repayments monthly, it will take you 30 years and cost you a total of $691,879.

By changing your monthly repayments to fortnightly ones, (effectively meaning an extra payment of $1,922 each year because there are 26 fortnights in a year) you’ll pay your home loan off four years and ten months earlier and save $64,174 in interest.

But can you pay off your home loan faster and maintain your lifestyle? Yes, there are some small things you can do that can make a big difference to your home loan without too much impact on your day-to-day lifestyle.

Understand your home loan

The first step towards paying off your home sooner is to understand your loan—how much you owe, how much you are paying and what other debts you have.

Use our debt reduction calculator to get a clearer picture.

Consolidate your debt

Over time, it’s easy to build up small debts. This could mean you’re paying higher interest rates and extra fees, which can keep you in debt for longer and impact your lifestyle. By putting all your debts into a home loan with a lower interest rate, you can get a clearer picture of what you owe and potentially save money too. Learn more about paying off debt.

Make fortnightly repayments

If you can afford it (and you’re not doing it already), consider increasing your home loan repayments from monthly to fortnightly. This small change can make a really big difference to your loan.

For example, say you’re making monthly repayments of $1,922 off your $350,000 home loan, with an interest rate of 5.20% per annum. If you continue to make repayments monthly, it will take you 30 years and cost you a total of $691,879.

By changing your monthly repayments to fortnightly ones, (effectively meaning an extra payment of $1,922 each year because there are 26 fortnights in a year) you’ll pay your home loan off four years and ten months earlier and save $64,174 in interest.

By changing your monthly repayments to fortnightly ones, (effectively meaning an extra payment of $1,922 each year because there are 26 fortnights in a year) you’ll pay your home loan off four years and ten months earlier and save $64,174 in interest.

Use our Rapid Pay calculator to work out how you could reduce the amount you pay and own your home sooner.

Use an offset account

An offset account is a day-to-day deposit account typically linked to a variable rate home loan. It allows the amount you have in your offset deposit account to reduce the balance of your home loan for the purpose of calculating interest charges.

Let’s say you keep $2,500 in your offset account. If you have a $350,000 home loan with an interest rate of 5.20% per annum you’ll only pay interest on $347,500 thanks to the offset. This means you’ll end up paying off your 30-year home loan three months early and saving about $7,6881 without any impact on your lifestyle.

Increase the amount of your payments

Let’s say you get a pay rise─congratulations! If you can use the extra pay to make more home loan repayments, then it’s a great way to get on top of your home loan, particularly if interest rates are low.

Say your home loan is $350,000 payable over 30 years with an interest rate of 5.20% per annum, with minimum monthly repayments of $1,922 to pay off the principal and interest. If you increased your regular repayments by just $100 a month, you could save $39,913 in interest and reduce the length of the loan by 3 years.

Try our extra repayments calculator to find out how much you could shave off your home loan.

Use a lump sum

If you received a lump sum such as a tax return, bonus, share dividends or inheritance, you could make a substantial dent in your home loan.

Let’s say you receive a $20,000 bonus for the year (after tax). If you put it towards your $350,000 home loan, you could save $62,168 in interest and take 3 years and 6 months off the length of your loan.

Use our Rapid Pay, calculator to see how much time and money you could save by paying more off your home loan sooner.

Switch to a home loan with a lower interest rate

Look at what interest rate you are currently paying on your home loan. Then compare that to other home loans to see if you could reduce the amount you are paying. But be careful to check the home loan fees, the features that are included and the conditions of the loan meet your needs, such as whether you can pay fixed interest, variable interest or a mixture of both. Find out more about home loan options.

Of course, everyone’s situation is different and you need to do what’s right for you. So think about whether you need to seek professional advice.

In the meantime, read more about switching to a home loan with a lower interest rate.


1 Calculations are illustrative, do not represent actual rates or products and are based on an interest rate of 5.20% per annum.

 

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It’s important to consider your particular circumstances and read the relevant Product Disclosure Statement or Terms and Conditions before deciding what’s right for you. This information hasn’t taken your circumstances into account.

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