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How to pay off your mortgage faster

Mark Bristow avatar
Mark Bristow
- 4 min read
How to pay off your mortgage faster

Not a fan of being in debt? Here are a few tips that could help you get your home loan paid off sooner, so you can own your home or investment property outright, without a mortgage hanging over your head.

Rethink that interest-only period

It may sound like a no-brainer, but it bears repeating: making regular principal and interest repayments will slowly but surely pay off your home loan. It’s not glamorous or clever, but it is effective. The more of your mortgage principal you can pay off, the closer you can get to paying off your property.

An interest-only period on your mortgage may sound tempting, as it can significantly shrink your monthly repayments for a limited time. However, these interest-only repayments won’t reduce the outstanding amount owing on your loan (the loan principal), meaning your mortgage will take longer to pay off, ultimately costing you more in interest charges.

Take advantage of lower interest rates

Has your lender cut your variable interest rate? Have you refinanced to a lender offering a lower rate, or a discounted introductory “honeymoon” rate?

These could be great opportunities to pay a bit less each month for your home loan, freeing up a bit of money in your household budget. But on the other hand, these could also be great opportunities to put a real dent in your mortgage principal.

If you can afford to keep making your original mortgage repayments after getting an interest rate discount that reduces your minimum mortgage repayments, the extra money you pay can go straight towards reducing your mortgage principal. This can bring you closer to paying off your property, and help reduce the total interest you may be charged.

Increase your repayment frequency

Many home loans use monthly repayments by default. While this is convenient to budget for and matches the pay cycles of many workplaces, switching to fortnightly or weekly repayments may help you pay off your mortgage a little bit faster.

While there are 12 months per year, there are 52 weeks, making up 26 fortnights. Because there are a bit over four weeks per month, fortnightly or weekly repayments means effectively making one extra monthly repayment each year. This may not seem like much, but it can add up over the long term.

Consider refinancing

The best mortgage for you today may not be the best choice for your financial situation next year, or in five or ten years time. Switching to another lender offering a lower interest rate or more useful features and benefits may allow you to make faster progress towards paying off your mortgage.

Just be mindful of your loan term when you refinance. For example, if you’re 10 years into a 30 year home loan and you switch to another 30 year home loan, you may be in debt for 40 years or longer. Even if the new loan has a lower interest rate, you could end up paying much more in total interest on your loan, unless you make a concerted effort to clear your principal faster by making extra repayments.

Consider an offset account

An offset account is a savings or transactions account where the balance is taken into account when calculating interest charges. For example, if you had a $300,000 home loan principal, and $50,000 saved in your offset account, you’d be charged interest as if you only owed $250,000 on your mortgage.

This can make a small but important difference to the amount of interest you’re charged, which in turn could help you put more money towards paying off your mortgage principal sooner.

It’s important to remember that some lenders charge fees for an offset account, or higher interest rates than more basic “no-frills” home loans. Consider the average balance you’re likely to keep in your offset account and whether the interest savings may be worth any extra costs.


This article is over two years old, last updated on May 27, 2021. While RateCity makes best efforts to update every important article regularly, the information in this piece may not be as relevant as it once was. Alternatively, please consider checking recent home loans articles.

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This article was reviewed by Personal Finance Editor Georgia Brown before it was published as part of RateCity's Fact Check process.