It is highly recommended, as Simon said, to pay Interest Only, rather than P&I on your loan. Then setup an offset account which is linked to your loan – once you put extra savings and monies here, then you will immediately reduce the interest you pay on the loan. The advantage is that, when you wish to purchase an investment property in a few years, you can actually take that money out of your offset account and use it towards purchasing your new property – under a P&I arrangement you can't do that as easily since the principal that is paid off can't be used as redraw, which is where the offset account comes into its own. This is useful from a tax point of view, at least in Australia.