5 ways to pay off your mortgage years sooner
None of these require earning a cent more — just repaying a little differently. On a typical loan, they add up to years off the term and tens of thousands in interest.
A home loan is the biggest interest bill most people ever carry, and because interest is charged on the balance, anything that gets that balance down sooner pays off twice over. Here are five levers — and they stack.
1. Make extra repayments
Every dollar above your minimum comes straight off the principal, so you stop paying interest on it for the rest of the loan. Even a modest amount each month, sustained over years, brings your payoff date forward dramatically. It's the simplest lever and usually the most powerful.
2. Switch monthly to fortnightly
This is the quiet trick. There are 12 months but 26 fortnights in a year. Pay half your monthly repayment every fortnight and you make the equivalent of 13 monthly payments a year instead of 12 — an extra month's worth, almost without noticing. On a typical loan that alone can shave several years and tens of thousands in interest.
3. Use an offset account
Money in an offset account reduces the balance you're charged interest on, dollar for dollar, while staying available to you. Running your salary and savings through an offset is one of the most efficient moves there is — effectively earning your mortgage rate, tax-free, without locking the money away.
4. Throw lump sums at it — early
A tax refund, bonus or inheritance applied to the principal has an outsized effect, because it removes interest for every year that follows. The earlier in the loan, the bigger the impact. A recurring annual top-up — say each tax-refund season — compounds the benefit.
5. Shorten the term
Refinancing or resetting from, say, 25 years to 20 commits you to a higher required repayment, but locks in a faster payoff and big interest savings. It's a more disciplined version of making extra repayments — the bank holds you to it.
See your head start
Mix extra repayments, fortnightly payments, an offset and lump sums — and watch the years and interest fall away.
One bigger-picture question worth asking: is paying down the mortgage the best home for your spare cash, or would salary sacrificing to super get you further? It depends on your tax rate, your loan rate and how soon you might need the money — our salary sacrifice comparison weighs them side by side. As always, these are estimates — confirm the detail with your lender or a licensed mortgage broker before acting.