You can actually slice years off your mortgage without outlaying an extra cent.

There are several ways you can accomplish this but among the simplest is to get a better deal and keep paying the same amount.

By doing so, you will be making a free overpayment, every dollar of which will come straight off your outstanding balance.

And it's never been easier to get a better deal.

All you need do is, tomorrow, phone your bank or financial institution and utter what is tantamount to a secret password: the phrase "professional package".

This will instantly alert them to the fact that you know they have customers who (if you do not already have one of these deals) pay less than you do.

Your bank is not likely to volunteer the information, but a professional package gets you an interest rate discount of 0.5 to 0.7 of a percentage point on the standard variable rate.

So rather than wait for the Reserve Bank to decree a rate decrease, you can give yourself the equivalent of at least two whole cuts tomorrow. You will be eligible for this special deal if your loan is greater than about $150,000 and your household earns more than about $50,000.

There will usually be an annual fee but for this you will get a package of products that includes a credit card and usually a transaction account.

Don't despair either if the professional package strategy proves fruitless and your lender refuses to budge on rates.

If you have had your mortgage for a few years, you can probably still get a better deal elsewhere.

A word of warning here, though: if you leave a lender in the first five years, you may face a penalty known as a deferred establishment fee.

The fee can vary from a flat rate of $700 to as much as 3 percent of the original loan value. So you could be up for $7,500 on a mortgage that was initially $250,000.

For every 0.5 percentage point you can cut off your interest rate, you will generate a saving of about $70 a month on the average $222,000 mortgage.

And if you keep paying what you are used to paying, you will be immediately that much ahead."

Nicole Pedersen-McKinnon

The Sun-Herald

1 July 2007

To calculate whether it's worth changing loans please feel free to use our loan repayment calculator.