Your home loan is probably the biggest investment you will make in your life and a debt that most people would like to pay off as quickly as possible. But how achievable is that?

Here are some of the key ways to pay off your mortgage sooner…

Re-evaluate your mortgage

How long has it been since you last had a good look at the details of your mortgage? Do you know where you are in terms of the progress you are making on paying it off, and importantly, is it still the best mortgage product that suits your needs?

With a long-term commitment like a mortgage, it is tempting to set and forget it and to just make repayments as they are due. But this can be a costly mistake. It is vital to regularly re-evaluate your mortgage and refinance where necessary. New products are always becoming available, rates change and so can your circumstances.

By regularly re-evaluating your mortgage, you could make real savings, pay off the debt sooner or release equity to invest elsewhere.

Make more frequent payments

Time is money and you may not think you can afford to increase the number of repayments you make to your mortgage, but it is a very worthwhile strategy that could see you clear your loan faster, with the added benefit of having to pay less interest overall.

If you presently pay your mortgage monthly, consider changing to fortnightly or weekly repayments (if your mortgage product allows). For example, if your monthly mortgage payment is $3,000, half this to pay $1,500 each fortnight and by the end of the year you will have paid off $39,000 rather than $36,000.

Don’t just pay the minimum

The minimum repayment is just that – a minimum! Many loans allow you to pay more than the minimum, whether it be ad hoc payments or regular overpayments. Check with your lender as to the terms of your particular product to see how much you can overpay.

Even small increases can make a real difference. Simply rounding up a number or adding an extra $100 to your payments will reduce your mortgage. If you don’t think this is affordable to you, start thinking outside of the box – consider putting bonuses, tax returns and gifts into your mortgage and you will soon be on your way to clearing your mortgage faster.

Maintain repayment levels when interest rates fall

Even if your lender reduces your repayments when fees or interest rates decrease, ask them to keep your repayments at the same level as before and you will pay down more of the principal with each payment that you make.

Get offset

If your mortgage allows for it, use an offset account – this is an account that is linked to your mortgage, and the amount of money in the offset account is deducted from your outstanding loan balance when the interest is calculated. For example, if your mortgage is $600,000 and your offset account has $20,000 in it, you will only pay interest on the remaining balance of $580,000.

An offset account saves interest whilst still giving you access to your savings and for property investors, it means they can maintain the tax deductibility of the mortgage.

Shop around for a better deal

Your mortgage needs to suit your personal circumstances and the loan you chose previously might not be suitable any longer. If your circumstances have changed or are about to change, consider whether or not your current mortgage is still the best product for you by discussing your needs with your mortgage broker who will be able to find you the right product and negotiate rates with lenders on your behalf.

But remember, you may be liable to pay break costs or other fees to your current lender if you decide to make changes to your loan, so this needs to be carefully explored when evaluating the benefits of making any changes.

Your mortgage broker will be able to provide details of any potential costs to make sure you have the right loan to get that balance down sooner.


Louisa Sanghera is a Finance Broker for Residential Mortgages, Vehicle and Asset Finance, Commercial Lending and Budgeting and Cashflow Coaching with Zippy Financial.

She has gained more than 30 years in the Banking and Finance Industry, and since founding Zippy Financial, has become a multi award-nominated expert in the field of finance featuring regularly in industry press and speaking at finance and investment seminars across the country.

Phone: 1300 855 022