Saving Money on your Loan

Reporter: Marguerite McKinnon

With the major banks increasing interest rates, some mortgage holders are feeling the stress but there could be a way to save thousands. When it comes to money matters, Kevin Gibbs and partner Rob Glenn are like personal trainers with their company Qwest focusing on financial health. "Well we don't just show people what to do, we work with them and make sure they actually do it," they said.

"It's a bit like Weight Watchers, you've got to weigh in and measure in every month." Financial Editor of Smart Investor, Nicole Pederson-McKinnon, said when it comes to paying interest, we are paying too much."The average Australian pays more than $300,000 in interest over their lives, that's on their credit cards, their personal loans and their mortgage," she said. "That's money you are simply donating to a bank but you don't have to." Nicole makes a living out of helping people to save and she comes back to five golden rules.

Rule 1: Ask for a discount
Your bank will not volunteer the information but they will have customers who pay up to 0.7 of 1 per cent less than you in mortgage interest. That is almost three rate cuts right there.

Rule 2: Fixed rates
Nicole said before banks started putting up their variable rates independent of the reserve bank, they actually stealthily put up their fixed rates, probably in the hope that people would be panicked into fixing at those higher rates.

Rule 3: Use every dollar twice
A magic little Australian invention called an Offset Account actually lets you use every dollar that passes through your hands to reduce your mortgage interest rate. Quite simply, any money you have in an offset account comes off your loan balance so you pay no interest on that amount.

Rule 4: Take up deals
Some 0 per cent credit deals charge you no interest at all on that balance for a period of up to six months. Just be sure to clear it within that six months.

Rule 5: Trim the fat
There are hundreds of ways that you can do this but three of the best are to entertain at home rather than going out, to get books and magazines from a library and to take, rather than buy your own lunch.

The fact is that every one of us wastes money every day that could be going to paying down debt and that would, as a result, save you a fortune."

For more information on saving money, visit Qwest for tips on investing and borrowing.

For more information on budgeting, loans and general finance, visit Understanding Money.

Spendtracker is a budgeting tool to keep track of your expenses.
Visit the site here.

Nicole Pederson-McKinnon has a new book out, visit http://www.nomumbojumbo.com.au/ for more info.