Owning a home for most of us is the single and largest commitment we have. Do you know that most Malaysians only pay minimum loan installment every month and this translates into paying nearly double your loan amount and serving all those interest to the bank.

Take for instance a RM300,000 loan amount with a 30 year tenure at an interest rate of 4.5%. If you pay the loan diligently until the whole tenure (taking interest rate constant) you will have paid a total of RM247,218.25 in interest. Well, this is what typical Malaysians are paying to the banks.

Sometimes, you just need to put a little extra effort into looking for ways to save those interest and this will definitely make huge impact on your savings. It is all about starting to do proper planning on your mortgages.

Taking the above example for instance, with a monthly loan installment of RM1,520 you can device savings strategies based on the huge range of mortgage packages offered by the bank. Different borrowers are suitable for different loan packages. You will have to find the one that can help you the most and please remember lowest interest rate does not necessary is the best loan package.

I will share with you 2 simple steps which you can apply which will save you tens and thousands in interest.

First Step, choose a Bi-weekly payment package

Instead of paying monthly installment you can opt for Bi-weekly payment instead. This is very popular in the United States. In the US, you need to pay a consultant to assist in setting up the account but in Malaysia it's free. Just walk right into the bank and get the mortgage officers assistance in applying for the package. This is how it works. (Please refer to Appendix 1)

Instead of paying the usual monthly installment you can pay half the amount but twice in a month. By doing this you have already saved 4.5 years on your loan tenure or RM42,495.71 in interest to the bank.

The next question going through your mind is what is the catch? It is too good to be true. Well, in any packages introduced by any banks, they will not want a losing business. In actual fact, you will be paying 1 extra month installment every year. Bi-weekly payment is calculated every 14 days and based on a year with 365 days the borrower will make 26 installments in a year instead of 24. Most borrowers will not even feel a pinch in their wallet but look at the savings. Second Step. Make extra payment towards the loan principal

If you would like to save more than this, then follow my second strategy which is very simple.

As a general rule of thumb take 10% of your monthly installment which is RM150 based on the previous example and use the money as extra payment towards the principal of your loan. You will combine strategy 1 and 2 together. (Please refer to Appendix 2)

Based on the above calculations, if you add both strategies you already saved 8.5 years off your tenure years and also RM78,000 in interest payable to the bank. Isn't this great?

Every loan borrower will be able to do this. You just need a little effort. In my years in mortgage consultancy I even manage to assist my clients to finish less than 10 years using money they already have. All these can be made possible with proper planning.