Australians are increasing their home loan repayments, saving money

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on February 24, 2021
Australians are increasing their home loan repayments, saving money

Australians are loosening the mortgage belt and getting ahead on their repayments, according to Greater Bank.

The customer owned bank said more customers are paying off more of their home loan than ever, with over 75% of its mortgage customers more than one month in advance on their mortgage repayments as at 31 January 2021. 

As an example, it said customers with a $300,000 Ultimate Variable Home Loan with a loan term of 30 years could save $16,051 and reduce their loan term by two years just by paying an additional $20 a week on their loan.


Buying a home or looking to refinance? The table below features home loans with some of the lowest interest rates on the market for owner occupiers.

Lender

Variable
More details
  • Min 30% deposit
  • No monthly or ongoing fees, add 0.10% for offset
  • Unlimited redraws

Variable Home Loan (LVR < 70%)

  • Min 30% deposit
  • No monthly or ongoing fees, add 0.10% for offset
  • Unlimited redraws
Variable
More details
REFINANCE ONLY
  • A low-rate variable home loan from a 100% online lender. Backed by the Commonwealth Bank.
REFINANCE ONLY

Variable Rate Home Loan – Refinance Only

  • A low-rate variable home loan from a 100% online lender. Backed by the Commonwealth Bank.
Variable
More details
AN EASY DIGITAL APPLICATION
  • No ongoing fees - None!
  • Unlimited additional repayments
  • Easy online application, find out if you're approved quick!
  • Redraw- Access your additional payments if you need them
  • Use the app to get loan insights to help you pay off your home loan faster
AN EASY DIGITAL APPLICATION

Neat Variable Home Loan (Principal and Interest) (LVR < 60%)

  • No ongoing fees - None!
  • Unlimited additional repayments
  • Easy online application, find out if you're approved quick!
  • Redraw- Access your additional payments if you need them
  • Use the app to get loan insights to help you pay off your home loan faster
Variable
More details
NO ONGOING FEES
  • No ongoing fees - None!
  • Unlimited additional repayments
  • Easy online application, find out if you're approved quick!
  • Redraw- Access your additional payments if you need them
  • Use the app to get loan insights to help you pay off your home loan faster
NO ONGOING FEES

Yard PAYG Home Loan (Principal and Interest) LVR ≤ 80%

  • No ongoing fees - None!
  • Unlimited additional repayments
  • Easy online application, find out if you're approved quick!
  • Redraw- Access your additional payments if you need them
  • Use the app to get loan insights to help you pay off your home loan faster

Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. However, the ‘Compare Home Loans’ table allows for calculations to be made on variables as selected and input by the user. All products will list the LVR with the product and rate which are clearly published on the Product Provider’s web site. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. *The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Rates correct as of August 15, 2022. View disclaimer.

Treasury figures show that Australian households deposited $100 billion more in their savings accounts in the 12 months to the end of November 2020, as Australians changed their spending habits due to uncertainty around employment and finances as a result of COVID-19.

During the same period, Greater Bank reported an increase in customer home loan repayments, which the bank says also aligned with the availability of more flexible repayment options on home, personal and business loans.

Greater Bank CEO Scott Morgan said for many Australians a home loan is the biggest debt they will ever have, and it's important to pay it off as soon as possible.

“Customer research that we undertook in November last year highlighted that paying off their home loan sooner was the number one financial priority for our customers,” Mr Morgan said.

“While COVID placed financial stress on many customers, it also provided an opportunity for us to work closely with those affected to ensure they remained financially secure through the pandemic, but also for many customers to actually improve their financial position by paying more off their home loan.

“On the back of recently released, record low home loan interest rates, customers continue to be well positioned to reduce both the interest payable and term of their loan, and realise their dream of owning their home sooner,” Mr Morgan said.

Customer-owned Greater Bank recently slashed its 'no-frills' one-year fixed rate to 1.69% p.a. (3.49% p.a. comparison rate*) making it one of the lowest fixed rate owner occupier loans on the market.

See also: The pros and cons of lowering your home loan repayments

How much you could save by making extra home loan repayments

Customers can potentially save a lot of money over the years by paying above the minimum required repayment. 

If your home loan allows you to make extra repayments you can pay off your loan faster - even just contributing an extra $100 a month could shave off thousands in interest over the life of your loan. 

For example, if you took out a $400,000 home loan with a loan term of 30 years, here's how much you could potentially save by contributing an extra $100 a month after the first five years according to Savings.com.au research:

Interest RateMin RepaymentAdditional contributionInterest saved by extra repaymentsTime taken off loan term
1.80% p.a $1,439/month $1.539/month $7,198 2 years
2.50% p.a $1,580/month $1,680/month $10,621 2 years
3.60% p.a $1,819/month $1,919/month $16,858 2 years 

Calculations via Savings.com.au's Extra & Lump Sum Payment Calculator.


Photo by Samson Katt from Pexels



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author-avatar
Emma Duffy is Assistant Editor at Your Mortgage and  Your Investment Property Mag, which are part of the Savings Media Group. In this role, she manages a team of journalists and expert contributors committed to keeping readers informed about the latest home loan and finance news and trends, as well as providing in-depth property guides. She is also a finance journalist at Savings.com.au which she joined shortly after its launch in early 2019. Emma has a Bachelor in Journalism and has been published in several other publications and been featured on radio.

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