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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.
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?
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.
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:
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.
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.
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.
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:
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.
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.
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.
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:
Even modest savings redirected toward mortgage repayments can help knock years off your loan and reduce overall interest costs.
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:
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.
For those unable to meet high repayment amounts solely from their salary, there are other ways to accelerate mortgage payoff, including:
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.
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 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.
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.