With a new financial year beginning, now’s a good time to check up on your loan and see how you’re tracking. Here are some great tips to make your handling your home loan as well as you can.

1. Budget
Make sure your home loan is factored in as part of a well-thought out budget. Your loan repayments should be the first thing you set aside when you’re planning ahead (such as saving for a holiday) or looking to reduce unnecessary spending. ASIC’s MoneySmart has a great online budget tool and app, which can help you look at reallocating your spending to where you need it most. HomeStart loans are great because with the Repayment Safeguard, you can don’t have to stress about your repayment amounts jumping upwards with rising interest rates. But your repayments will be reviewed each year with inflation, so you can also factor this into your budget plan.

2. Payment frequency
You can choose whether you want to make repayments weekly, fortnightly or monthly. Opting to pay weekly or fortnightly can help you get ahead on your loan, as this will equate to more repayments within the same year. There are 26 fortnights in a year but only 12 months in a year.

For example:
 
Repayment amount (per month) Frequency over 1 year  Amount paid over 12 months
$1,500 Monthly ($1,500x12) $18,000
$1,500 Fortnightly ($750x26) $19,500

Paying more over the same period means that you’ll save on interest charges over the life of the loan (the bigger your loan balance, the more interest you will pay), and build equity in your home sooner. If you get paid fortnightly, it may help to synchronise your loan repayments to when you get paid.

3. Round up
If your repayment amount is an uneven number (e.g. $1,473 per month), if possible, round it up (e.g. $1,500) so that you are paying a little bit extra, each month. It may not seem like much, but it will add up over a year.

4. Make the most of low rates
With interest rates as low as they have ever been, now is a good time to get ahead of your loan term. Keep your repayment amounts the same as when interest rates were higher, and your loan term will reduce while you build equity in your home, sooner. With HomeStart loans, this will happen automatically because of our Repayment Safeguard. If you’re feeling like your repayments are high, login into eHomeStart and see what’s happened to your forecasted loan term – you may get a pleasant surprise.

5. Voluntary lump payments
A voluntary repayment is when you choose to make a repayment that exceeds your minimum required repayment amount. It’s a great way to reduce your loan balance and the interest charges you pay over the life of your home loan. Think about using funds such as tax returns and gifts, to put straight towards your loan. By staying ahead of your repayments, you could also have the option to redraw those funds should the need arise.

6. Home Equity Loans
If you’re tracking well with your loan, you may want to think about using some of the equity in your home for home renovations, which could add more value to your home. HomeStart has a Home Equity Loan for both house-related and non-house related expenses.

7. Stay in touch
It’s important to review your loan, particularly if your circumstances change. Stay in touch with your HomeStart lender, use eHomeStart to check in with your loan, and check out at MyStart for more handy information about managing your loan.