Home News Own your home sooner

Own your home sooner

Font size :
Nila Sweeney

Q. Like all people, I want to own my home as quickly as possible. I originally borrowed $150,000 and still owe $110,000. I have a fixed interest rate of 7.15% until May 2008. Why don't I seem to be knocking off more of my loan? I have heard about 100% offset and all-in-one loans, but do you recommend this for someone on a small single income? What do you suggest is the best option to own my home sooner? Should I simply refinance (moving to a new lender) at a lower interest rate?

A. Offset or all-in-one accounts allow you to offset your savings, salary and other cash resources against your home loan principal and therefore you pay less interest on your loan. Making your monthly repayments in weekly or fortnightly instalments will also cut interest costs as your outstanding loan balance is reduced and as a result you pay less interest on that lower balance. Borrowers often pay a higher variable interest rate on such loans because offset and all-in-one accounts offer many features which ultimately result in higher administrative costs to the lender. If you don't have much surplus cash to offset against your home loan principal your offset or all-in-one account may cost you more money than it saves (because of the higher interest rate and/or charges). At the end of the day the main way to owning your home faster is to make extra repayments into your home loan over and above the minimum repayments required. Most fixed rate loans allow extra repayments, although in limited amounts. Check with your lender if you can repay extra and whether it will attract any fees. The more extra repayments you can make, the more your repayment will go towards the loan principal, rather than the interest. Refinancing is always a good idea if it saves you money. But you need to ask your existing lender what break costs or discharge costs you will face if you refinance with a new lender. You then need to balance the costs of breaking your existing mortgage against the financial benefits of moving to a new loan with a lower interest rate. Don't forget that if you're on a tight budget a fixed rate loan offers you more financial security

Related: Home Loan Calculator

Whether you are looking to buy your first home, move home, refinance, or invest in property, a mortgage broker can help. Access loans from all the major lenders, get help with paperwork – plus there is no charge for this service. Get help from a local mortgage broker

Mortgage News and Articles

Choosing the right mortgage is hard for many first-home buyers Choosing the right mortgage is hard for many first-home buyers

Many feel overwhelmed by the sheer range of products and interest rates on offer, a new survey reveals Read more

Mortgage applications drop in second quarter Mortgage applications drop in second quarter This marks the “beginning” of a downward trend, says Equifax executive ... Read more

To break monopoly, many smaller lenders could become banks To break monopoly, many smaller lenders could become banks The proposed change could break the Big Four’s monopoly over the mortgage market and help families get cheaper home loan rates ... Read more

Borrowing against the home: A strategy to pay for aged care Borrowing against the home: A strategy to pay for aged care Such debts can generally be divided into long-term and short-term loans ... Read more

More mortgage news and articles

Sponsored Links

Monday, Jul 24, 2017
Top Featured Rates
Top Bank Rates

Get help choosing the right home loan

Whether you're a first homebuyer, looking to refinance, or investing, it's important to have the right loan for your needs. Just fill in a few details below and one of our trusted mortgage advisers will contact you.

A quick & easy way to find the right home loan
  • Purpose of mortgage
  • Household Income
    $
  • How much do you want to borrow?
    $
  • How much deposit do you have?
    $
  • How much is your house worth?
    $
  • How much do you still owe on your mortgage?
    $
  • What type of mortgage do you have?


  • How much is your new home?
    $
  • How much do you want to borrow?
    $
  • How soon do you want a mortgage?
Next
  • First name
  • Last name
  • Where do you live?
  • Phone number

Special Offers

Related Keywords