Today's courier mail included a quote from Catriona Lowe, CEO of the Consumer Action Law Centre. 

She was talking about mortgages and made the comment that, 'Most claims to reduce your mortgage involve paying more money - it's as simple as that'.

She is, of course, correct.  Consider for example the first commonly promoted way of reducing your mortgage - halve your monthly payment and then pay it fortnightly. There are 12 months in a year and 26 fortnights, so by doing this you are effectively making an extra months worth of repayments.  Or consider the strategy of paying your income to your home loan, then putting your expenses on a credit card that is paid off from your home loan.  All you are really doing is putting more money toward your home loan sooner.

A home loan is simple maths.  Interest accrues on the balance.  The balance is reduced by your payments.  If you want to get ahead you must make extra payments.  It's not really rocket science.

It is a great personal finance strategy too, make extra repayments early to reduce your loan and get rid of any potential 'interest rate stress' if rates ever rise.

Cheers

Scott Francis