Pay off your mortgage in record time

Unless you're one of the country's richest people, you will need a bit of help from a bank to buy your home. A mortgage, however, doesn't have to rule your life forever - there are smart ways to ensure you pay it off in record time.

Most home loans are calculated to run over 25 or 30 years, which means a large chunk of your repayments is directed towards the interest rather than the original amount you borrowed - known as the principal of your loan. Ensuring your repayments chip away at the principal is the best way to shave years off the life of your mortgage. You can do that in a number of ways.

The simplest way is to pay your mortgage fortnightly - or even weekly - rather than monthly. For example, if your repayments are $2000 a month, you can split the amount to $1000 each fortnight. This way, you end up making more repayments over the course of the year, and the life of the loan, without paying more.

"There are 26 fortnights in a year, so you end up with a 13^th month [of repayments] at the end of the year," explains financial adviser Marc Bineham, managing director of Noall & Co.

"This can reduce a 25-year mortgage by five to seven years."

Bineham also recommends paying your salary into an offset account - a savings account linked to your home loan, where the balance of the savings account is offset against that owing on the mortgage. The interest on your mortgage is calculated on the amount owed minus the savings balance in the offset account, so you end up paying less and save money over time.

"An offset account is a terrific way to pay your mortgage fast because it's not that hard to do," Bineham says.

"And it can take three or four years off the mortgage."

Mark Bouris, executive chairman of Yellow Brick Road Wealth Management, recommends paying any extra injections of income straight into your mortgage as another sure-fire way to pay it faster.

"Make your money work for you by putting your annual tax return and any bonuses or unexpected money back into your home loan," he says.

Bouris adds when interest rates drop, the best thing you can do is keep your repayments at their current level.

That way more of your money goes towards the principal rather than the interest.

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