How to Pay Off Your Home Loan Sooner

Paying off your home loan faster can save you thousands in interest and help you achieve financial freedom sooner. Whether you're just starting out or a few years into your mortgage, here are practical strategies you can use to reduce your loan term and repay your home loan more quickly.

1. Make Extra Repayments

One of the simplest ways to reduce your loan balance faster is by making extra repayments whenever possible. Even small amounts can make a big difference over time, especially if your loan allows additional payments without penalties.

💡 Tip: Putting your tax return, bonus, or side hustle income straight onto your mortgage can shave years off your loan term.

2. Switch to Fortnightly Payments

Most lenders calculate interest daily, so switching from monthly to fortnightly repayments means you'll make the equivalent of one extra monthly repayment each year. Over time, this small change can significantly reduce your interest costs.

3. Use an Offset Account

If your home loan comes with an offset account, use it like your everyday transaction account. Every dollar sitting in the account reduces the interest charged on your loan, helping you pay off the principal faster.

Example: $20,000 in your offset account means you only pay interest on the remaining loan balance.

4. Round Up Your Payments

Round your repayment amount up to the nearest $50 or $100. For example, if your required repayment is $1,843, consider paying $1,900. These small boosts add up and help reduce your principal balance faster.

5. Review Your Interest Rate

If your interest rate is higher than current market rates, it might be time to refinance. A lower rate means more of your repayment goes towards the principal, not interest.

💬 Compare current home loan rates at RateHunt.com.au to see if you can get a better deal.

6. Avoid Interest-Only Loans (Unless Strategic)

While interest-only loans can offer flexibility in the short term, they don’t help you reduce the principal. If your goal is to pay off your home loan sooner, a principal and interest loan will get you there faster.

7. Refinance to a Shorter Loan Term

If your financial situation allows, consider refinancing to a shorter loan term (e.g. 20 years instead of 30). Your repayments may be higher, but you'll clear the debt much sooner and save significantly on interest.

Final Thoughts

Paying off your home loan sooner is achievable with a few smart strategies and a bit of consistency. Every extra dollar you contribute now can reduce years of repayments in the future.

📢 Looking for a better home loan rate?
Use our home loan comparison tool to see if you could save by switching.

From the Blog

How to Pay Off Your Home Loan Sooner