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Tip Store: Banking: Interest Rates

Keep Your Payment Level

With all the recent interest rate drops on home loans there have been massive decreases with payments. We are fortunate with a low mortgage but have always paid a little extra (even $20 helps). As the interest rates drop, if you can afford it...keep your payments at the previous amount. We haven't lowered our payments and now pay an extra $150 a fortnight on our loan! We simply ignore the letters the bank sends to inform us our mortgage payments have decreased and live as if they are still as they were six months ago. If you've already budgeted for the higher amount it shouldn't make a difference to your daily spending anyway. Also, if you're keen to work out how many years and interest you save with extra payments, many banks have online calculators to work this out. By paying our extra $150 I think we're saving ten years off the length of our home loan! This is a great check-up when we're feeling tempted to redraw or decrease our payments.
​- Contributed by Laura, Jingili, 29th April 2009