Earlier this month, the Reserve Bank of Australia hiked the cash rate by 0.25%, taking it to 0.35%. With the rise of inflation, this is tipped to be the first of a series of rate rises this year.

The best thing to do if you have a home loan is to get ahead of your repayments. A variable rate loan will get you accustomed to making more significant repayments. The benefits? You get to pay your loan much faster by putting a little bit more on your mortgage repayments each month.

IT GIVES YOU A SAFETY BUFFER

Implementing additional repayments to your home loan can protect you from all future rate rises. You could also save a significant amount of interest on your mortgage.

For instance, if you put an additional $100 on a loan amount of $600,000 over a 30 year loan period at an interest rate of 5%, you could save $43,325.34 in interest and fees, cutting an estimated one year and 11 months off your repayment plan (calculation source: Bank of Queensland).

SAVE ON INTEREST WITH AN OFFSET ACCOUNT

Putting your savings into an offset account linked to your home loan account will also reduce the amount you pay in interest. You save the after-tax rate equivalent from the amount held in your offset account to the interest charged on your mortgage.

For example, if you pay 4% interest on your home loan, you will save 4% of the amount held in the offset account. You will only be charged interest on the difference owing between the home loan amount and the amount held in your offset account.