That's easy. Surely you just pay off as much as possible?
That's the general idea. But with interest rates at comparatively low levels, it's also true that you don't get as much bang for your added repayment buck as borrowers did when interest rates were in the double digits. So it pays to be smart about when and how you make your extra repayments.

The case for making extra repayments is much more compelling in a high-interest-rate environment than it is when rates are low. If you had a 25-year $250,000 mortgage at the current standard variable rate of 6.57 per cent, you'd pay a total of $260,000 in interest or a bit more than the amount of your loan. But if rates were 12 per cent, that would rise to $540,000 more than double the original loan amount.

How much should I be paying off my loan now?
The table was put together by Andrew Willink of the interest rate research firm Cannex. It shows that the biggest benefit is paying something extra off your home loan even if it isn't a lot. You get a greater benefit from those first extra dollars than you do from throwing big wads of money at the mortgage although, obviously, the more you pay, the more you end up saving.

Looked at another way, if you increase your loan repayments by a mere 5 per cent, you can save $33,667 interest on that 25-year $250,000 mortgage. But if you increase your repayments by 10 per cent, your interest savings don't double they only rise to $58,975. Each additional dollar spent on extra repayments provides a smaller incremental benefit.

Your extra repayments also work harder the earlier they are made. This is because your normal repayments largely go towards paying interest in the first few years of your loan. Towards the end of the loan, almost all your repayments are paying off capital so while extra repayments can speed the process along they won't generate the interest savings that you get by making extra repayments in the early days.

If you inherit $10,000 from Great-Aunt Mabel, for instance, and put it into your mortgage at the end of the first year, you'll save $25,143 in interest and cut the term of the loan by two years and two months. But put that money into the mortgage after 20 years and your interest savings will be just $3685 although you'll still cut eight months off your loan.

But can't I save more by using one of those mortgages where my salary goes into the loan account?
Lenders have recently been pushing these all-in-one loan products by promising you'll save squillions. But the benefits can be illusory.

All-in-one mortgages are structured so that your salary is deposited into your mortgage, thereby reducing the loan while the money is in the account.

But the success of this strategy depends largely on whether you are a net saver, or, like many people, you tend to spend your salary.

For instance, if you have your $800 salary deposited into your mortgage each week and withdraw $776.92 for spending, you're putting an extra $100 a month into your loan. According to www.yourmortgage.com.au you'd save $38,462 in interest and pay off your loan in 21 years, nine months. But if you had a normal home loan, and made extra repayments of $100 a month, the results would be similar: you'd save $38,634 and pay off the loan in 21 years, 10 months.

Unfortunately, the glossy examples assume you'll leave a fair whack of your salary untouched in the account indefinitely. If, for example, you spent only $600 a week you'd pay off the loan in 11 years, seven months and save $151,690 in interest. Then again, you'd get a similar result by simply paying an extra $200 a week off your mortgage.

All-in-one mortgages can also have higher interest rates than standard or basic home loans, which further erodes their benefits.

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