The 6 home loan tips I give everyone who’s just bought a house
Treat your loan as a financial tool rather than a burden. You'll pay it off faster and make your mortgage work for you.
The day you move into your new house is an exciting day for every first home buyer. It's also the day your home loan begins
At this stage, most first-time buyers try to forget about their home loan. The repayments just disappear out of your bank account each month. Out of sight, out of mind.
But now is a fantastic time to actually look at your home loan properly, figure out how you can manage it and find ways to get rid of it faster.
1. Take charge of your home loan repayments
You can make budgeting easier by knowing exactly how much you're spending on home loan repayments each month (check your latest statement or log onto your lender's website).
If you're making monthly repayments, consider switching to fortnightly repayments. This is a little trick to speed up your loan repayments and pay less interest.
2. Keep an eye on your home loan
Don't just set up your repayments and then forget about your home loan. This debt is a major part of your finances, so treat it like your savings and start paying attention to it.
Interest rates change all the time. In the last 18 months rates have "risen to the highest levels that we have seen since 2012," says Soho co-founder Jonathan Lui. "Rates are still in a state of flux without a clear terminal rate."
Borrowers who've just started paying off their home loan are particularly exposed to rate rises. So check your home loan statements from time to time and look out for changes to your interest rate.
If your repayments are eating up more and more of your income, you may need to redo your budget and find ways to cut back
3. Use your offset account (if you've got one)
The 100% offset account is probably the most useful feature on a home loan. You can use it as your savings account.
The more money you save there, the less interest your lender charges you. Your monthly repayments stay the same but you'll end up paying the loan off faster, meaning less interest costs.
And the money is always there if you need access to it.
Not every home loan has an offset account. If your home loan doesn't have one, think about switching to one that does later down the track.
4. Make your home loan part of your future financial plans
Managing and paying off your home loan debt should be a key part of your long-term financial strategy.
Maybe you want to get out of debt as soon as possible. Which means making extra repayments or building up savings in the offset account.
If you're thinking of upgrading to a bigger house, the more of your loan you pay off, the more equity you have to cover your next purchase.
You might even decide to just keep the home loan ticking along over 30 years and invest your extra savings instead.
5. Check your lender's website every now and then
Every few months I check the current interest rate on my home loan and compare it to what my lender is currently advertising for new customers.
And sometimes I realise they're offering a better deal for new borrowers while leaving me on a higher rate.
Then I call my lender and ask them to give me their new, lower rate. And every time, they do.
6. Remember, you can leave at any time
A home loan feels like a lifelong debt but you are not stuck with your current lender. You can refinance, which sounds complicated but just means switching from one lender to another.
You can move to a loan with a lower rate, an offset account, or a handy smartphone app that makes your life easier.
Need a home loan? Check out some of the market's lowest rates.
