Simple ways to pay off your home loan faster

By paying extra off your loan when you can, you could reduce the amount of interest you pay and get to the finish line faster.

Switch to fortnightly repayments

If you’re currently making monthly repayments, switching to fortnightly payments can be a simple way to chip away at your loan.

When you pay half your monthly repayment every two weeks, you end up making 26 half-payments each year, which works out to the equivalent of 13 full monthly repayments instead of 12.

That extra repayment each year can help reduce your loan balance faster and lower the interest charged over the life of the mortgage.

Make small extra repayments whenever possible

Even modest additional payments can make a big impact in the long run.

Every extra dollar goes straight onto your loan balance, which means future interest is calculated on a lower amount. Whether it's $20 a week or $100 a month, regular contributions add up.

Some common opportunities for lump sum repayments include:

• tax refunds.
• work bonuses.
• inheritance or gifts.
• savings from cutting back on expenses.

Before making extra repayments, it’s important to check your loan conditions, particularly if you’re on a fixed rate, as some loans have limits or break costs.

Review your interest rate regularly

Many borrowers stay with the same lender for years without checking whether their interest rate is still competitive.

Interest rates can vary widely between lenders, and your bank won’t always automatically offer you a better deal.

It can be worth:

• comparing loans with similar features.
• asking your lender for a rate reduction.
• considering refinancing if the savings outweigh the costs.

Just be sure to factor in any discharge fees, application fees, or other refinancing expenses before switching.

Keep repayments the same if rates drop

If your interest rate falls, your minimum repayment may decrease. But if you continue paying the same amount as before, the extra money goes directly towards reducing your loan balance.

This is a simple way to pay off your mortgage faster without feeling like you’re making a big change, and it can potentially shave years off the loan term.

Consider an offset account

An offset account is a transaction or savings account linked to your home loan.

The balance in the account reduces the amount of your loan that interest is calculated on. For example, if you have a $500,000 mortgage and $20,000 sitting in your offset account, you’ll only be charged interest on $480,000.

Offset accounts can be a great tool for people who keep consistent savings, but they sometimes come with higher fees, so it’s worth checking whether the benefit outweighs the cost.

Avoid interest-only loans if your goal is to pay off sooner

Interest-only loans can seem appealing because repayments are lower at first, but they don’t reduce the loan balance during the interest-only period.

That means:

• you’re not building equity as quickly.
• you’ll pay more interest overall.
• repayments may jump significantly once the interest-only period ends.

If paying off your mortgage faster is the goal, principal and interest repayments are usually the better long-term option.

Round up your repayments

A surprisingly easy trick is to round up your repayments whenever possible.

For example, if your repayment is $2,430 a month, rounding it up to $2,500 can make a noticeable difference over time, without dramatically affecting your weekly budget.

Use windfalls wisely

When unexpected money comes your way, it can be tempting to spend it straight away. But putting even part of it into your home loan can provide long-term savings.

This might include:

• an unexpected bonus.
• a cash gift.
• savings from selling an old car or furniture.

The sooner it goes into the loan, the more interest you may save.

Always check fees and loan rules first

Not every strategy suits every mortgage. Some loans charge fees for extra repayments, while others offer flexible redraw facilities.

Before making changes, check:

• whether extra repayments are allowed.
• if fees apply.
• whether your loan has redraw or offset features.
• what happens if you refinance early.