Taking out a first home loan? Here are some tips to save you money

Have you found the house you’d like to own? Your next step is getting a home loan and hopefully in a way that allows you to minimise your costs.

You might be surprised by how much you could potentially save over time by being proactive with your home loan selection. After all, a mortgage is a 20-30 year commitment, so saving a few dollars here and there can really make a difference.

Mozo’s banking expert, Peter Marshall and Chief Customer Officer at Tic:Toc, Faith Brockhoff say that cutting down on your home loan costs is certainly possible by choosing the right home loan features to suit your needs.

So here are some tricks to keep your costs low, as determined by the experts: 

The lower the home loan interest rate, the less you will pay on your repayments and as a whole over the life of the loan. 

“Don’t just settle for the first rate you see or are offered by your existing bank. Spend a bit of time looking at a range of home loan options from a variety of lenders so that you can determine what’ll be the best option for you,” says Marshall.

By doing your research, you could stumble upon an opportunity that’s a good fit for you. 

Brockhoff notes that “even a slightly lower interest rate can lead to some serious savings over the long haul.”

To crunch the numbers, try using a home loan comparison calculator to give you an idea of how your top home loan picks stack up against each other.

It’s very common for mortgage repayments to be monthly but lenders will generally also offer weekly or fortnightly options. 

While being on a monthly repayment plan could be the more financially comfortable option if your salary is paid monthly, weekly or fortnightly payments might actually be better. 

“If you have the option, making more repayments towards your home loan can help you pay off your loan quicker,” says Marshall.

Brockhoff says that making more frequent payments could also save you some money on interest. This is because in that set-up a year would consist of 52 weekly payments, which is a lot more than 12 monthly payments.

The number of fees you pay when you take out a home loan can really start piling up. From the application fees, to ongoing ones, you could be spending more time on your budget spreadsheet than you’d like. 

However, there are lenders out there who charge less fees - some even skip them altogether. For example, Brockhoff says that Tic:Toc doesn’t charge fees because it uses technology to automate the traditional home loan process to pass on the savings to customers.

So, it’s definitely possible for home loans to come without fees and keeping a lookout for them might be the way to save hundreds or even thousands of dollars.

“But even finding a home loan with lower fees can still bring you a great amount of savings,” Marshall explains. “And if you are paying fees for certain features that’s ok but just make sure you’re not paying for things that you don’t or won’t ever use.” 

An offset account allows you to link your everyday bank account to your home loan. It’s potentially a handy feature to have as the money deposited into the account acts as a placeholder of sorts, to offset the loan principal and can be a way for you to reduce the interest payable. 

Marshall points out that every feature that comes with your home loan has the potential to impact how much money and time you spend paying it off. So it’s important to take your time and familiarise yourself with the different options available to you.

Compare home loans

Not sure which home loan will be best for you? Why not check out the round up of the best home loans our money experts have tracked this month, or you can start comparing your top choices below!