It really comes down to two factors – be on the product with the lowest interest rate that suits your needs and pay more into your loan.

With all the rate drops we have had, were you one of the people that reduced their repayments accordingly?

I know how tempting it is, and don’t worry most of us did the same, but repaying more than the minimum can reduce the overall term of your loan and save you thousands of dollars in interest.

Jump onto a mortgage calculator to see how much you can save.

For example an additional $50 a week at an interest rate that remains at 4%; with an original term of 30 years can save you $47,000 in interest and reduce your loan term by seven years.

It is quite common that additional repayments on a fixed rate loan incur early payment cost.

Some loan arrangements allow a set amount over the fixed term, so it is paramount you understand the features of your loan.

The best solution is to split your loan – have some fixed and some variable.

Additional repayments are paid on the variable portion of your loan and if you attach a 100% offset account to that variable rate loan, even better.

Most lenders allow you to package a mortgage with an interest offset account.

An offset account allows you to reduce the amount of interest paid on your loan by offsetting the amount in the (offset) account against your loan balance.

Wages and other income can be deposited into your offset account.

The offset account is simply your transaction account with the funds sitting in that account, saving you interest as you only pay interest on the difference between your debt and the amount in that offset account.

For example: loan account has a debt of $250,000 and you have $5000 in the 100% offset account – you pay interest on $245,000.

Interest is calculated daily and charged monthly so every day that you have your savings in that offset account it is saving you interest.

Note that you don’t earn interest on the funds in the offset account, (you are saving interest instead) and that offset is usually only available on variable rate loans.

Don’t be afraid to switch banks if you need to once you have compared interest rates, fees and charges.

Chat through your options and ensure you do your research on competitors and if you don’t have time - seek some help.

Olympia Andronicos is a credit representative (507463) of BLSSA Pty Ltd ACN 117 651 760 (Australian Credit Licence 391237). Choice Finance Specialists 0418 690 628.