Putting your savings on your home loan could cut years off the period of time you have to pay your mortgage. Picture: Thinkstock

Plus if you continue the savings habit it could take years off your loan, according to figures from finder.com.au.

Money expert Michelle Hutchison says keeping your savings in your mortgage may significantly reduce the life of your loan.Source:Supplied

Money expert Michelle Hutchison said if you put an extra $100 a week onto you mortgage for a year to save for something in particular, when you drew that money back out a year later you would have saved being charged $126 in interest for the period, plus have the $5200 you had saved.

If you put the same amount in a standard savings account you would only earn about $85 in interest, but because that is considered taxable income most would only end up with an extra $60 to add to that $5200 total.

“You would therefore more than double your savings if you put $100 into your mortgage repayments rather than into a savings account,’’ Ms Hutchison said.

For those who can pay an extra $100 a week on their mortgage indefinitely Ms Hutchison said the savings were huge.

On an average New South Wales mortgage of $409,800 it would reduce the overall amount you potentially had to pay by $137,000 and the loan period by 10 years or more.

Even in Tasmania where the average mortgage is $211,600, it would knock about fourteen years off and save you about $102,790 in repayments during the life of a 30 year loan.