Smart borrowers can save $130,000
Borrowers can save thousands of dollars and many years from the life of their mortgage by maintaining existing repayments as rates fall, setting up a redraw or offset facility on their loan, pay all fees and charges up front, ignoring the honeymoon period or paying fortnightly.
Redraw means making extra repayments that reduce interest calculated with the opportunity to redraw all or some of that money later. An offset account is linked to your mortgage so all deposits into the account reduce the total interest charged.
A borrower with a $300,000 loan can save $133,000 and 11 years from their mortgage if they maintain the same repayments they were making before interest rates began to be cut by the Reserve Bank last year. Average minimum repayments have come down $774 per month since September.
Source: The Age