Save on your home loan - be clever about paying bills

A bit of effort could give you FREE money!

 

If you have a fully flexible home loan account which allows overpayments and redraw with no fees use it to your advantage.

When a bill comes in pay the amount into your home loan account as soon as the bill arrives. Then set up a payment for the bill from your loan account the day before the bill’s due date. It does not sound worth while, but have a think about how many bills you pay each year. Let’s take a couple of examples:

• Monthly credit card bill for $1000 arrives on 15th of the month and it is not due for payment until the 2nd of the following month. By putting the $1000 into your loan account and paying the bill 2 weeks later from the loan account you just saved almost $3 in interest. Do this every month and you will save $36 in interest.
• Quarterly Electricity bill for $400 – put the $400 into your home loan for 2 weeks and over the year you could save $4 in interest.

Do this with ALL your bills and who know how much you could save. $100 per year – maybe more? All depends on how big those bills are. It does not sound like much, but essentially it’s free money. Would you say ‘no’ if someone offered to $100 – no strings attached? 

Try it for a year and see for yourself.

This example is based an initial loan of $300,000 over 30 years at a rate of 7.5%. The savings are not exact and are designed to be nothing more than thought provoking. The scenarios are generic and do not take individual circumstances into account. You should seek independent financial advice before making any significant changes to your financial products.