Drip-feeding extra money into your mortgage as often as you can makes excellent financial sense. So does making one-off lump-sum payments - a good way of using extra cash from a windfall, a tax refund, or just the mother of all garage sales. Repaying money on a mortgage is no different from investing that money at the mortgage interest rate, after tax. There are very few investments that offer a risk-free, after-tax return of about 6.7 percent.

But if your entire mortgage is on a fixed rate, your options for drip-feeding may be limited. The ASB, for example, allows you to increase your fortnightly or monthly interest payments on a fixed-rate mortgage - provided you keep the new payment level up for the remainder of the fixed-rate period. And the ASB charges you for making one-off additional payments during the fixed-rate period. Other lenders are likely to have similar or even tighter restrictions.

Try to pay off the mortgage before you build up your savings (even if you've got a high-paying savings account). If you're paying a mortgage at 9 percent interest, for example, and you've got cash in a savings account earning 6.7 percent interest, your cash is losing 2.3 percent per annum. What's more, you'll be paying up to 39 percent income tax on your savings-account interest - which makes your loss even greater. You'll always be better off paying the savings into your mortgage rather than having a separate savings account.

Yes, you can probably earn more from a finance-company term deposit than what you're paying out in mortgage interest: finance-company rates for $10,000 over 12 months range up to 11 percent. But such investments carry a much greater level of risk than a savings account. By comparison, paying off the mortgage is a virtually risk-free strategy. And it'll give you as good a return, if not better.

Paying fortnightly instead of monthly is a very smart way to reduce mortgage costs.

As we all know, broadly speaking a month is two fortnights. But there aren't 24 fortnights a year; there are 26. Paying half your monthly repayment every fortnight means, in effect, you will make an extra month's repayment each year. You probably won't even notice.

Again, say you're repaying $150,000 over 20 years at 6.7 percent. The monthly repayment is $1136 and the total interest bill is $122,662. If you pay half the monthly repayment each fortnight, the term drops to around 17 years and you save nearly $21,000 in interest.

When floating interest rates change, the lender usually adjusts your regular repayment to keep the term of the mortgage the same. If the rate goes down, you pay less on each repayment. But if you maintain your repayment when the rate falls, you'll save.

That $150,000 mortgage at 6.7 percent will cost $1136 per month to repay over 20 years. Assume that five years into the term, the interest rate drops to 5.7 percent. In order to still have the mortgage repaid over 20 years, the lender will drop the monthly repayment to $1066. But if you kept the repayment at $1136, the term would drop to 18.5 years and you would save $6515 in interest.

The days when people had to grovel to their bank manager in order to get a mortgage have long gone. Banks and other lenders are now very keen to sign up mortgage customers and they compete fiercely for your business. You can take advantage of this competition. Keep an eye on rates and, if you find someone offering a significantly better deal, ask your existing lender to match it. If they won't, consider switching. 

You may find that just lining up a better option will force your existing lender to come to the party. Before you switch, give them a last chance!

One cheap way to keep your mortgage competitive is to take advantage of new options offered by your existing lender. They might, for example, advertise a special fixed-rate deal that's better than your current floating rate. Switching to it could involve little or no cost to you.

Watch out for mortgage-reduction agencies. They operate by refinancing your existing mortgage using a revolving-credit facility, and charge quite high fees for the privilege. If you want revolving credit, forget the separate agency and go straight to your bank. They'll set it up for a fraction of the cost. 

You should also be cautious of deals offered by people who reckon they can lend you money with no deposit. Some of these are legitimate offers, but others are scams. Get your lawyer to check the paperwork before you sign anything.

Fixed interest is usually offered at a lower rate than floating interest, so it can make good sense to take a fixed-rate mortgage. Of course, the floating rate will almost certainly change, and if it goes down your gamble may not pay off. Fixed rates are usually offered for anything up to five-year terms. Because of the risks involved, we think you should fix for no longer than a couple of years.

Fixed-rate mortgages have another potential disadvantage - they can be inflexible. If you want to vary the repayment terms or repay early, you'll usually have to pay a penalty. However, increasingly the banks now allow you to make lump-sum payments in some circumstances (such as up to five percent of the outstanding debt each year) without penalty.

The solution widely used these days is to split the mortgage, putting most of it on a fixed rate and some on a floating rate. 

If you like the idea of paying a chunk of your principal off every month, then you've probably got a table mortgage. But a reducing mortgage is smarter.

With a table mortgage, you pay mainly interest in the early years - later, you start paying off the principal. But with a reducing mortgage, the principal is split into even amounts that you pay off each month from the very beginning. This means that payments start high, because you're making monthly repayments of your principal as well as paying interest on what's outstanding. But as time goes on, your remaining principal gets smaller - and so do the interest payments.

We hear from people all the time whose bank has not processed the loan or loan repayments correctly. Check your statements, and make sure you understand what's happening to your mortgage. If you find a problem, complain.

For instance, we know of several cases where interest rates fell and the bank reduced the borrower's repayments, even though the borrower had told them repeatedly to maintain the repayment level. We've also heard of cases where the bank has charged an interest rate higher than the one it should have been charging!

It may seem contradictory to all our advice about getting rid of the mortgage as quickly as you can - but once you've paid it off, don't discharge the mortgage document. This way, if you want to borrow against the property again from the same lender, you will avoid the cost and inconvenience of getting new legal documents drawn up.

Some people think they must leave a nominal sum on the mortgage to do this (say $50). That's not necessary, and incurs interest.