7 ways to save big on your mortgage

By Michael Yardney

Buying a home requires the biggest financial commitment most people will ever make.

Investors, of course, can multiple this obligation by one, two or many times, but they also have the advantage of having a tenant paying rent on their properties to help cover their mortgage repayments.

The thing is, far too many people make simple mistakes when it comes to their mortgages.

But the problem with simple mortgage mistakes is that it can cost you an enormous amount of money over the life of your loans.

And that money is far better in your pack pocket or being used to generate wealth!

The good news is there are number of ways that can help you save big on your mortgage.

1.     Use a budget
If you want to save money, you must spend less than you earn, right? 
Only when you can see your true money position can you be responsible for the desired outcome – so you need to devise a
budget and keep to it! 
Most people, including many high income earners, don't understand that they can’t live beyond your means yet they expect things to be different despite continually overspending.
For example, as a way to save money that could be more effectively used on your mortgage, why not take your shopping list with pre-planned meals and ingredients with you when shopping for groceries and never go shopping when you’re hungry.

2.     Keep your savings on your mortgage
It’s astounding how many families have one or more savings accounts while also paying a mortgage. 
Why pay tax on interest earned from these accounts (even if it’s only a small amount) when you could be offsetting the higher interest cost of your mortgage? 
Technology has allowed us to have more control and flexibility over our bank accounts than ever before.
So, instead of squirreling your savings in a separate account, why not save additional funds on your mortgage account where it can reduce your interest repayments while still being available for you to access when you want?  

3.     Put your income/s in your offset account
While your income is resting in an
offset account, you are saving interest every single day because interest is charged monthly but calculated daily. 
Even if you spend the majority of your income by month’s end (which you shouldn't if you budget!) you can still pay your mortgage off quicker by depositing your income directly into an offset account thereby lowering your interest payments. 

4.     Pay yourself first
If, like many Australian families, you are struggling to meet your financial commitments every month or your expenses fluctuate from month to month, I suggest you pay yourself 10 per cent of your income before you pay anything else.
It’s an old but wise maxim to pay yourself (in your savings or offset account)  at least 10 per cent of your income.  Then live off the rest.
This creates forced savings as well as some interest cost savings, with this extra money accruing if you allow it too. 

5.     Review your costs periodically
Once you know where you are at and how much you are spending, it’s easy to compare and lower your expenses. 
Contact your mobile phone, utilities and other bill carriers and negotiate a better deal. 
When buying household items and gifts, research the different deal sites and online shopping sites, which can save you up to 70 per cent or more on the cost of identical or comparable items.
When reviewing your costs, eliminate any unnecessary costs. 
Ask yourself, for instance, if you really need Foxtel? 
You see it’s not always about going without, often it’s about finding more efficient ways to achieve the same outcome. 

6.     Every winner needs a coach or mentor
There's never been a sporting star that didn't have a coach to create their goals, habits and mindset, and to hold them accountable to them. 
The same can be said of your finances and property dreams and goals. 
You should seek out a quality coach or mentor and have them on your team –this is possibly the best investment you can make.

7.     Review your financial position regularly
Let me be clear: those who are successful financially all have one thing in common. 
Quite simply they always know exactly where they are financially. 
Conversely, those who are unsuccessful usually don’t have a clue where they are at financially at any given time. 
You need to review your financial position on a regular basis.
There shouldn't be any financial surprises if you're completely aware of what income is coming in and what expenses are going out. 

The bottom line…
While you’re likely to need a mortgage to buy your home or investment property, this doesn't have to be a millstone around your neck.
Instead, recognise it as a financial product which they can use to their advantage.
If you borrow money against an appreciating asset, this is good debt, as long as you plan and budget accordingly.  

Michael Yardney is a director of Metropole Property Strategists, which creates wealth for its clients through independent, unbiased property advice and advocacy. He is a best-selling author, one of Australia’s leading experts in wealth creation through property and writes the Property Update blog.