The Australian Bureau of Statistics says that in Australia, the average size of loan for a home is around $400,000. Since the majority of people take more than 30 years to repay their loan, they will incur a huge $319,820.45 worth in interest (if we assume a 4.5% interest rate).

If homeowners reduced their payment term to 25 years, they could save more than $60k. Bearing this in mind, we have produced a list of tips that will give you a few ideas on how to reduce the amount of interest you pay and be mortgage-free.

1. Make use of a 100% offset account

If after buying a home you have any savings, a 100% offset account might be the ideal account for you. With this type of loan, you can link a savings account to the variable-rate balance of your home loan. Then, your interest repayments are worked out by subtracting the amount in your savings account. So, if the money remains in your savings account, you will pay less on the home loan. This means you will save thousands and could end up paying off the loan more quickly.

2. Think about a split-interest loan

Home loan interest is calculated in one of three ways. With a variable rate, the interest rate fluctuates with the market. So, if the rates go up you will pay more but if they go down you will pay less. With these loans, it’s often possible to make repayments without having to pay fees to do so.

With a rate that is fixed, you will pay the same percentage of interest for the time period agreed. This is usually between three and five years. This can protect you from a market increases for interest rates. With this type of loan, however, you might be charged for any repayments above your agreed amount.

You can get the best of both, though, by having a portion of the loan on a fixed rate with a portion on a variable rate. This way, some of your loan will be protected from a rise in interest rates but the portion that is on a variable rate will allow you to make repayments above your usual amount without having to pay fees.

3. Make repayments every two weeks

A loan can be repaid fortnightly or every month. Paying every two weeks can actually save you months or even years off your loan. Why might this be? It’s simple, there are 26 payments throughout the year if you pay fortnightly! This means you will effectively be paying another month off your home loan each year.

Contact the team today if you would like to discuss fine-tuning your repayments.