Will an interest-only mortgage help me pay off my debt faster?

No – an interest-only mortgage offers buyers the opportunity to pay less each month for one to five years by only contributing to interest payments. This means the principal loan amount isn’t reduced, so this won’t help you pay off your principal faster at all. You’ll end up paying substantially more in interest as a result of your principal not reducing for the duration of your interest-free period.

Is refinancing to a split rate home loan a good idea?

A split loan allows you to have a portion of your loan on a fixed interest rate, and another portion on a variable rate. The portion of the split doesn’t have to be even, either, so you could opt for 70% of your loan to be on a fixed rate for a set period of one to five years and 30% to be on a variable rate, giving you the flexibility to pay lump sums off the variable part of the loan, but budgeting certainty for the larger majority of your mortgage. You’ll have to revisit your loan after the fixed term expires.

Should I refinance with different lenders to take advantage of better offers?

Refinancing to a better loan can save you thousands in interest and fees if you can take advantage of lower interest rates. However, watch out for substantial discharge or break fees (if you’re under a fixed term) and new loan establishment fees which could make a dent in the advantage you gain by refinancing. In addition, be aware that frequent loan applications may influence your credit rating. You can also talk to your existing lender and ask if they’re prepared to offer you a fee-free switch to a more favourable rate loan offered by them.

Where do I find the best home loan rates in Australia to help me pay off my mortgage faster?

Savvy is a great place to start when you’re looking to compare mortgages. We list and compare the top mortgage offers on the market right now so you can see exactly what’s being offered to borrowers by our lending partners to help them pay off their home loans faster.

How can I pay my home loan off faster if I’m a first homebuyer?

Most states have programs in place designed to reduce the financial burden placed on first home buyers called First Home Owner Grants. Depending on where you live, you could receive up to $15,000 to put towards a deposit for your mortgage, which means you may not have to borrow as much money by contributing a larger deposit. There are also other initiatives available across Australia in relation to stamp duty concessions or exemptions, which can help free up your available funds, so you should check both federal and your state or territory’s government websites to find out more information.

What percentage of my salary should I put towards paying off my loan sooner?

This will, of course, depend on your personal circumstances, such as your family situation, income, expenses, loan amount and interest rate. As a general rule, around 28% to 32% of your total household income should be funnelled into your mortgage repayments, as this gives you the best chance of paying off your home loan sooner. You may find that your expenses are such that you can afford to add extra on top of that, which will cut down on your loan term.