With the high cost of living, Australians are looking for smarter ways to save - and bargain websites have become a game-changer. Whether you’re shopping for fashion, electronics, travel, or everyday essentials, knowing where to find the best deals can save you hundreds - if not thousands - each year.
Paying down your mortgage early can save you thousands in interest, give you greater financial freedom, and reduce stress in the long run. Whether you’re looking to make extra repayments, adjust your loan structure, or simply manage your finances more efficiently, this guide will walk you through the strategies that can help you reach your goal of becoming mortgage-free faster.
Contents
How Long Does It Take to Pay Off a Home Loan?
Proven Strategies to Pay Off Your Home Loan Faster
Can You Pay Off Your Home Loan in 10 Years?
Alternative Ways to Fast-Track Paying Off Your Home Loan
Common Mistakes to Avoid When Paying Off a Home Loan Faster
Paying Off Your Home Loan While Carrying High-Interest Debt
Struggling with Unmanageable Debt?
How Long Does It Take to Pay Off a Home Loan?
Average Mortgage Terms in Australia
The average new owner occupier home loan in Australia is $665,978 (in December 2024, according to money.com.au). If this was paid over 30 years, the monthly repayments would be $4,096 based on an interest rate of 6.24% p.a. However, how long it actually takes depends on repayment frequency, interest rates, and extra contributions.
Making extra repayments, switching to fortnightly payments, or refinancing can significantly reduce loan duration and interest costs, helping homeowners pay off their mortgage faster.
How to Calculate Your Loan Payoff Time
Understanding how long it will take to pay off your home loan can help you make informed financial decisions. The key factors that determine loan duration include:
- Loan amount – A larger loan naturally takes longer to pay off unless additional repayments are made.
- Interest rate – A lower rate reduces total repayment costs, while a higher rate extends the time needed to clear the loan.
- Repayment amount – Increasing repayments, making lump sum payments, or switching to more frequent instalments can significantly shorten the loan term.
To calculate your loan payoff time and explore ways to reduce it, use a home loan calculator. These allow you to input your loan details and compare different repayment strategies to see how much time and money you could save.
Proven Strategies to Pay Off Your Home Loan Faster
To pay off your home loan faster, you can increase repayment frequency, make extra repayments, use an offset account, or refinance to a lower rate. These strategies reduce interest and shorten the loan term, helping you become mortgage-free sooner. Below, we break it down further.
Increasing Your Repayment Frequency
Switching from monthly to fortnightly or weekly repayments is a simple yet effective way to reduce interest and shorten your loan term.
Since a year has 12 months but 26 fortnights, making fortnightly repayments results in the equivalent of 13 monthly payments per year instead of 12 - effectively paying an extra month’s worth each year. Over time, this small adjustment can shave years off your loan and can save you thousands in interest.
Offset Account vs Redraw Facility
- Offset Account: A transaction or savings account linked to your home loan. Any money in this account reduces the loan amount charged interest. For example, if your mortgage is $400,000 and you have $20,000 in your offset account, you’ll only pay interest on $380,000. The money stays accessible, making it useful for savings and emergencies.
- Redraw Facility: Lets you make extra repayments on your loan, lowering the amount you owe and reducing interest costs. Unlike an offset account, this money goes directly into your loan, but you can withdraw it later if needed. However, some lenders may have limits, fees, or waiting times for redraws.
Refinance to a Lower Rate
Refinancing your home loan can be a smart move if it means securing a lower interest rate. A lower rate reduces the total amount of interest paid, helping you pay off the loan faster without increasing repayments.
Before refinancing, consider:
- Current market rates – Is there a significantly better deal available?
- Break costs – Are there fees for switching lenders?
- Loan features – Does the new loan offer useful options like extra repayments or an offset account?
If refinancing isn’t an option, you can still negotiate with your lender for a better rate, especially if you have a strong repayment history.
Avoid Interest-Only Loans
Interest-only loans may seem appealing due to lower initial repayments, but they come with long-term drawbacks. Since you're only covering interest costs during the interest-only period, the principal remains unchanged, meaning you'll eventually need to make higher repayments to pay off the loan.
Switching to a principal and interest loan ensures that each payment contributes toward reducing your debt, helping you pay off your home loan quicker.
Round Up Your Repayments
A simple but effective way to accelerate loan repayment is to round up your mortgage payments. For example, if your minimum monthly repayment is $1,950, rounding it up to $2,000 may not feel like a huge difference, but over time, those extra payments reduce the loan term significantly.
Reduce Lifestyle Expenses to Free Up Cash
Freeing up extra cash for mortgage repayments doesn’t have to mean extreme budgeting. Small adjustments in daily spending can make a noticeable difference over time.
Some easy ways to cut costs include:
- Switching to generic brands for groceries and essentials.
- Reducing multiple subscriptions (e.g., Netflix, Disney+, Stan) and keeping only the most used services.
- Shopping around for better deals on utilities, insurance, and internet providers.
- Find and use discounts when purchasing everyday essentials.
- Dining out less and preparing meals at home.
Even modest savings redirected toward mortgage repayments can help knock years off your loan and reduce overall interest costs.
Can You Pay Off Your Home Loan in 10 Years?
Paying off a home loan in 10 years is possible, but it requires a disciplined approach and aggressive repayment strategy. The key to success is minimising interest and consistently making extra repayments while maintaining financial stability.
Some essential steps to achieve this goal include:
- Making significant extra repayments – Every additional dollar paid above the minimum shortens the loan term.
- Using an offset account – Keeping savings in an offset account reduces the interest charged.
- Choosing a low-interest loan – Refinancing to a more competitive rate can save thousands.
- Finding additional ways to generate – Using any additional income towards the mortgage reducing your loan balance.
- Avoiding unnecessary spending – Directing surplus income towards the mortgage instead of lifestyle expenses.
Example Calculation
For a $500,000 loan at an interest rate of 6% p.a., a standard 30-year mortgage would require monthly repayments of around $2,998.
To pay it off in 10 years, the monthly repayment would need to increase to approximately $5,552 - a significant jump but it maybe achievable with the right planning.
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Alternative Ways to Fast-Track Paying Off Your Home Loan
For those unable to meet high repayment amounts solely from their salary, there are other ways to accelerate mortgage payoff, including:
- Renting out part of the property – If your home has a spare room, consider renting it out to generate extra income. Even a small rental income of $200 - $500 per month can contribute significantly over time.
- Starting a side hustle – Freelancing, consulting, or launching a small business alongside your primary job can create an extra income stream that goes directly toward your mortgage.
- Negotiating a salary increase – If you’re in a strong position at work, negotiating a higher salary or better benefits can help free up additional funds. Redirecting any pay raises toward the mortgage rather than lifestyle upgrades can fast-track repayments.
- Cutting large discretionary expenses – Reviewing spending habits, such as downsizing a car, reducing dining out, or limiting luxury purchases, can make a big difference in freeing up extra cash for loan payments.
Common Mistakes to Avoid When Paying Off a Home Loan Faster
While aggressively paying off a mortgage is a great goal, it’s risky to put every extra dollar into the loan without a financial safety net. Unexpected expenses - such as medical bills, car repairs, or job loss - can arise, and without savings, borrowers may be forced to take on high-interest debt just to cover costs.
To prevent this, financial experts recommend maintaining an emergency fund of at least three to six months' worth of expenses before committing all surplus funds toward mortgage repayments. This emergency fund could be paid into an Interest Offset Account, saving interest and ultimately reducing the term of the loan.
Paying Off Your Home Loan While Carrying High-Interest Debt
Rushing to clear a mortgage while still holding high-interest debt - such as credit cards, personal loans, or payday loans - can be a costly mistake.
Consider this:
- A mortgage may have an interest rate of 6%, while a credit card could charge 20% or more.
- Paying off a $5,000 credit card balance first will save more in interest than directing those funds toward the home loan.
A better approach is to clear high-interest debts first before aggressively tackling the mortgage. This ensures that money isn’t wasted on unnecessary interest payments.
Important Note: This strategy works best when you able to continue to keep on top of your credit card going forward, otherwise you may fall further into a trap of paying off an old credit card balance only to just accumulate more debt on the credit card again.
Struggling with Unmanageable Debt?
While paying off a home loan faster is an excellent financial goal, it can be challenging when other debts become unmanageable. If you're struggling with multiple repayments, high-interest credit card debt, or financial stress that’s preventing you from making progress, Revive Financial can help.
At Revive Financial, we offer tailored Debt Management Solutions designed to help Australians regain control of their finances. Whether you need a structured repayment plan, creditor negotiations, or a solution to ease financial strain, our team of Customer Success Specialists are here to guide you.
Call us today on 1800 534 534 to speak with one of our experienced Customer Success Specialists.
Or, if you prefer a quick and easy way to assess your options, complete our free online assessment to get started.
