Top tips to trim mortgages

There are easy ways to save money on home mortgages, according to Yellow Brick Road Wealth Management.

Here are some of its top tips:

1. Look outside the big four banks for your loan. There are other lenders and offers that can be better for you.

2. Pay your loan off weekly or fortnightly rather than monthly.

3. Choose a loan with offset or redraw. Put your salary into your home loan and use a credit card with an interest-free period to cover daily expenses. The offset or redraw account can then be used to pay off credit card debt before interest costs are incurred.

4. Put your annual tax return back into your home loan.

5. If fixing your mortgage rate, make sure you make extra payments off the loan, otherwise you’ll restrict your ability to accelerate reduction of your debt.

6. If you have higher cost debt – credit cards, personal loans or car loans – pay this off first.

7. Know the payout penalties attached to your home loan and how long they apply. You don’t want to suffer large transfer costs if moving to a new loan.

8. Pay off non-tax deductible debt first. If you have an investment property or a loan for shares that are tax deductible, be sure to pay off your home loan first.

9. Negotiate fees, rates and conditions. If you can’t do it yourself, consider hiring an expert.

10. Beware low-start or honeymoon-rate offers, where loans start cheap but can end up expensive after the initial period.

11. If you receive a pay rise, try to put as much as possible of the additional take-home pay back into your home loan.

12. If possible, make your first mortgage payment on the settlement date of your loan rather than one month later, as the contract normally requires. You will be a month ahead even before you start.

13. Try to pay associated loan costs such as application fees, legal costs or home loan insurance costs from your own cash savings rather than adding them to your loan balance and incurring added interest.

14. Look for a loan that is portable and can be moved to your next home with minimal costs.

15. Review your loan at least once a year with an expert. All things change over time and it’s smart to stay on top of things.