Owning your home sooner doesn’t have to mean making big sacrifices. With the right strategies, you can reduce the interest you pay and shave years off your loan term. Here are some practical tips to help you get ahead.
Making small extra repayments each month and keeping your savings in a redraw or offset account can make a big difference. Over time, these strategies could save you thousands in interest and help you pay down your loan much quicker.
Both offset and redraw help you save on interest, but they work in slightly different ways. An offset is a separate account linked to your loan, while redraw is the extra money you’ve already paid into your home loan.
Redraw is the additional money you’ve repaid above your minimum instalments. These funds sit inside your home loan, reducing your balance and interest charged—while still being accessible if you need them later.
An offset account looks and works like a normal everyday account. Instead of earning interest, the balance reduces the amount of interest charged on your home loan—helping you get ahead while still giving you access to your money.
Because offset accounts can be used just like a regular transactional account, you can pay your bills, shop, and make daily purchases while still cutting down on your mortgage interest.
Some lenders allow you to have your salary paid directly into your offset or redraw account. This keeps your income working harder for you from day one, reducing interest charges immediately (conditions may apply).
Every dollar sitting in your offset or redraw reduces the amount of interest your lender charges. That means more of your repayment goes toward paying down the principal, helping you move closer to being debt-free.
When you make extra repayments into redraw, your loan balance comes down and your interest is reduced. But your overall loan limit remains the same, giving you flexibility to access those funds later if needed.
If your loan is Principal & Interest, your contractual monthly repayment won’t change. However, the more money you keep in redraw or offset, the less interest you’ll pay—so more of your repayment chips away at the loan principal.
By building up funds in redraw or offset, you’re effectively fast-tracking your loan. The more you save in these accounts, the quicker you’ll reduce your balance and shorten your loan term—bringing you closer to owning your home outright.
