Owning your home outright might feel like a far-off dream, especially if you’re grappling with cost-of-living increases – but with a few smart financial strategies, it could become a reality sooner than expected.
Paying off your loan faster doesn’t have to mean overhauling your lifestyle or making huge sacrifices. In fact, many people make real progress just by making small, consistent changes that build over time.
Whether you’re a few years into your home loan or just getting started, there are things you can do now that your future (mortgage free!) self will thank you for.
Why paying down your loan matters
Before diving into the “how”, it’s worth remembering why you might want to pay your mortgage off ahead of schedule. For most of us, our home loan is the single largest debt we’ll ever take on. Paying it down and reducing it – even by a few years – could mean thousands saved in interest. It also opens up a world of possibilities: more cash flow for other goals, less financial stress, and ultimately, more financial freedom. Here are some ways to get ahead.
Switch to fortnightly payments
This is one of the simplest changes you can make, and it’s surprisingly effective. Instead of paying your mortgage monthly, consider switching to fortnightly repayments. Because there are 26 fortnights in a year – but only 12 months – you’ll end up making the equivalent of 13 monthly payments per year instead of 12. That one extra payment doesn’t feel like a big leap, but it could shave years off your loan and reduce the interest paid significantly.
Put your offset account to work
If your mortgage comes with an offset account, treat it like your best financial ally. An offset account is a transaction or savings account that’s linked to your loan. The balance in this account “offsets” your mortgage, reducing the amount of interest you’re charged.
For example, if you owe $400,000 on your loan and have $20,000 sitting in your offset account, you’ll only be charged interest on $380,000. It doesn’t reduce the loan amount directly, but it cuts the interest – and that could lead to fewer loan repayments over time.
To make the most of your offset account, consider having your salary deposited directly into it, and try to keep your everyday spending funds in there as long as possible.
Top up your repayments when you can
Another great strategy is to add a little extra to your repayments when you’re able to. There are times when you might be feeling under financial pressure, and this may not be possible but when you can manage it, small amounts add up over time. Think about windfalls too – tax returns, bonuses, or even money saved from cutting back on unnecessary subscriptions. Directing those towards your home loan could give your balance a healthy nudge in the right direction.
Review your mortgage regularly
Home loans shouldn’t be a “set and forget” arrangement. Every year or two, it’s worth reviewing your current loan to make sure it still suits your needs. We can certainly help with this and explore other options with you.
Sometimes, negotiating with your current lender can result in a better rate. Other times, refinancing to a new loan with more competitive terms might make sense. While you might be able to save money over the long term by refinancing, it’s important to consider any costs associated with switching to a new lender.
Avoid redrawing unless you really need to
If your loan has a redraw facility, it can be tempting to dip into the extra repayments you’ve made. Life throws curveballs, and sometimes you may need to access that money – and that’s okay. But if paying off your loan faster is your goal, try to think of redraw funds as an emergency safety net, not a savings account.
Stay focused with clear goals
Paying off a mortgage is a long-term commitment, and staying motivated can be tough – especially when progress feels slow. That’s why it helps to set short-term goals and celebrate the small wins.
Maybe it’s aiming to pay off a little more each month or bring your loan balance below a certain number by year’s end. These milestones can keep you engaged and give you the momentum to keep going.
Ultimately, paying off your mortgage sooner doesn’t have to involve making massive changes. It’s about being intentional, forming good habits and being consistent – keeping your eye on the prize – and getting that mortgage off your back.
