Paying Off Your Home Loan Faster: 5 Clever Strategies for Australian Homeowners

Let's be real - a 25 or 30-year home loan doesn't mean you're locked into decades of repayments. With some smart strategies, you can potentially shave years off your mortgage and save serious cash on interest.

Here are five tactics that could help you become mortgage-free sooner:

  1. Shop Around for a Competitive Rate. The home loan market is seriously competitive right now. With thousands of loans available, there's a good chance you could find a better deal.We can compare over 60 lenders on your behalf. A lower interest rate means more of your hard-earned money goes towards the principal instead of interest.
  2. Switch to Fortnightly Repayments. By paying half your monthly repayment every fortnight, you'll essentially make an extra month's payment each year. This might sound small, but it can add up significantly over time. Lenders may treat monthly versus fortnightly repayments differently, so we can check with them before you make the switch to make sure this strategy will work for you.
  3. Make Small Extra Repayments. Here's a game-changer - if your loan allows it, paying just a dollar a day extra can make a massive difference. Say you had a $400,000 loan for 30 years paying 6% p.a. interest. Paying an extra $10 a fortnight could save you $13,574 in interest and shave 9 months off. Make it $20 a fortnight, and you could potentially cut 17 months off your loan term. That's less than the price of a morning coffee!
  4. Use Unexpected Windfalls Wisely. Got a tax refund or work bonus? Consider putting it straight into your home loan. In the example above, a $2,000 lump sum made after the first year could trim four months off your loan term and save you over $9,000 in interest.
  5. Explore Offset Accounts. An offset account can be a clever way to reduce your interest. For instance, in the above example, if you had $10,000 in an offset account and added an extra $10 a fortnight, you could save over $58,000 in interest and two years. Your savings work harder without being locked away, potentially helping you pay down your loan faster.

Beyond saving on interest, paying your loan off early means:

  • Less stress about interest rate changes
  • Building property equity faster
  • The ultimate freedom of being debt-free

Remember, every little bit helps. Chat with us about the right strategy for your specific situation, and don't forget to check for any potential fees before making changes.


Published: 13/1/2025
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