Home' InDaily : October 2nd 2009 Contents Save on your home loan
Ahome loan is one of the biggest
investments you make and for
that reason it's not something you
should set and then forget about.
Just like taking a look at what you
spend on food, there are savings to be had
when you review your home loan.
We've certainly noticed an increasing
number of people focusing on paying
down their debts and making additional
home loan repayments. Making voluntary
repayments is a good way to reduce your
home loan and the interest you will pay.
However, there's more you can do to
save on your home loan and own your
home sooner without stretching the
Talk to your bank - With the significant
evolution of finance products, the loan
you took out five years ago may not be the
best loan for your banking needs today.
Regular home loan reviews are important
to ensure you continue to get a good rate
and the loan is not only meeting your
needs but has the features you require to
help you pay it off sooner.
Ask for a discount -Your lender may
be able to provide a discounted rate
particularly if you consider consolidating all
your banking with one financial institution.
Many lenders now offer packages -- A
suite of products offered at a discounted
rate that generally includes a home loan,
credit card and daily transaction account.
There is usually an annual fee but in
most cases it will be outweighed by the
discounts. This is particularly the case
when receiving home loan discounts such
as 0.5 per cent p.a. off the variable home
On a $250,000 mortgage at today's
variable rate of 5.79 per cent p.a., this
type of discount would drop the rate
to 5.29 per cent p.a. resulting in up to
$1250 in interest saved in the first year of
the loan. Add to this the fee savings on
the home loan and discounts across the
transaction and credit card, and the total
savings in year one could easily exceed
more than $1500.
The key is to pay these savings on to
your home loan to chip away at the debt
and help pay it off sooner.
Pay weekly - It is possible to save
tens of thousands of dollars on your loan
without increasing your repayments. The
trick is to make smaller instalments more
frequently by switching from monthly
to weekly repayments - that's important
when interest is calculated daily.
For example, if repayments on a
$250,000 home loan at 5.29 per cent p.a.
over a 25 year term were converted from
monthly instalments of $1515 to weekly
repayments of $378.75, the total amount
of interest saved during the life of the
loan would be $35,692 and the loan term
would be reduced by about three years
and 10 months.
One thing to factor in when switching
to weekly payments is that there will
be the equivalent of an extra month's
payment a year. This is simply because
some months of the year include five
The key point to all of this is that there
are ways to reduce your debt and pay off
your home loan sooner that don't need to
add pressure to your household budget.
Having a good relationship with your
banker will help in exploring these options
and maximising all strategies to pay off
your home loan as soon as possible.
-- Chris Ward (above) is general manager of BankSA.
A beauty in
The top seller in a slow week for
auctioneers was a three-bedroom
unit with polished pine floors at 2/14
Talbot Grove, Heathpool, which sold for
A light-filled, renovated home at 22
Selby Street, Kurralta Park, sold for the
next best price of $412,000.
Located just five minutes from the
city, at 103 Coglin Steet, Brompton, was
the third best seller. The original miner's
cottage fetched a price of $360,000.
Five properties presented for sale and
two were passed in, leaving these three
as the only sales under the hammer this
Talbot Gve, Heathpool $430,000
Selby St, Kurralta Park $412,000
Coglin St, Brompton $360,000
Coglin St, Brompton --sold for $360,000
Talbot Gve, Heathpool -- sold for $430,000
Selby St, Kurralta Park -- sold for $412,000
The key point
to all of this
is that there
are ways to
debt and pay
off your home
need to add
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