Housing market: How to take years off your mortgage

PHOTO: Mortgage

Experts say the wisest path to financial security is to pay down your home loan faster. Here’s a guideline on the best way to do that

Record low interest rates means Aussies can pay off their home loan debt sooner by making slight extra payments.

Paying an extra $534 per month at an average variable rate would allow a $400,000 mortgage to be paid off 10 years faster.

But new data from comparison site Canstar shows the simple difference between the average and cheapest loans could be half-a-decade after RBA governor Philip Lowe cut the official rate to 1.0 per cent in July.

“Getting into the right loan will get you debt free sooner,” the site’s finance expert Steve Mickenbecker said.

“Shifting from the average variable rate of 3.97 per cent to the lowest rate in the market at 2.89 per cent will save $239 in monthly repayments on a $400,000 loan over 30 years.

“If and when you move to a lower rate loan, keep making the old, higher repayment.

“That’s what you are used to and chances are you won’t notice the difference, but it can knock over 5.5 years off the life of your loan.”