10 Smart Ways to Pay Off Your Home Loan Sooner (and Save Thousands in Interest)

A 30-year home loan can feel like a life sentence — but it doesn’t have to be. With the right strategies, you can cut years off your mortgage and save tens (or even hundreds) of thousands in interest. Whether you're a first home buyer or a seasoned borrower, these ten tips will help you get ahead and achieve mortgage freedom faster.

1. Make Fortnightly Instead of Monthly Repayments

Instead of 12 monthly repayments, switch to 26 fortnightly payments per year. Why?

• There are 52 weeks in a year — that’s 13 monthly repayments instead of 12.

  
  

• This small change results in an extra repayment every year, significantly reducing your loan principal.

  
  

• For example, on a $500,000 loan over 30 years, you could save over $30,000 in interest and cut your loan term by several years.

  
  

2. Pay More Than the Minimum

Paying even a little extra each month can have a compounding impact.

• An extra $100/month on a 30-year, $500,000 loan at 6% interest could reduce the term by over 4 years and save over $90,000 in interest.

  
  

• Set up automatic extra payments or schedule regular top-ups manually.

  
  

• Aim to increase repayments when possible — even indexing them to inflation annually can help.

  
  

3. Use an Offset Account

An offset account is a transaction account linked to your home loan. The balance offsets your loan amount, so you’re only charged interest on the difference.

Example:

• Loan: $400,000

  
  

• Offset Account: $20,000

  
  

• Interest Charged On: $380,000

  
  

Benefits:

• The more you keep in the offset, the less interest you pay.

  
  

• Interest savings are effectively tax-free (unlike interest earned in a savings account).

  
  

• Use it for your salary deposits, savings, and emergency funds — and keep your money working 24/7.

  
  

4. Round Up Your Repayments

A painless but powerful strategy:

• If your monthly repayment is $1,486, round it up to $1,500 or $1,600.

  
  

• These extra dollars each month directly reduce your principal.

  
  

• Over 10–20 years, the savings can be massive — and you won’t even notice the difference in your day-to-day spending.

  
  

5. Increase Your Repayments When Your Income Rises

When you get a pay rise, bonus, or promotion, increase your loan repayments.

• Most people increase their spending as their income grows — this is called lifestyle inflation.

  
  

• Redirecting even part of your raise to your home loan can help you maintain financial discipline and pay down your loan faster.

  
  

• Set your repayments higher than the minimum to create a built-in buffer.

  
  

6. Refinance to a Lower Interest Rate

Even a small difference in interest rates can translate to huge savings over time.

• Example: On a $600,000 loan, reducing your rate from 6.5% to 5.5% could save you $3,000–$5,000 a year.

  
  

• Refinancing may also let you:

  
  

  • Switch to a better loan structure

    
    

  • Consolidate debts

    
    

  • Access features like offset accounts or redraw

Tip: Work with a mortgage broker who can compare offers from multiple lenders to find the right deal for you.

7. Make Lump Sum Payments

Put windfalls to good use:

• Tax refunds

  
  

• Work bonuses

  
  

• Inheritance

  
  

• Dividends or investment returns

  
  

• Sale of personal items

  
  

These lump sum contributions go straight to reducing your loan balance, lowering your interest and shortening your loan term.

Example: A $10,000 lump sum paid in year 5 on a $500,000 loan could save over $25,000 in interest and reduce the term by a year or more.

8. Avoid Interest-Only Loans (If Not for Investment)

Interest-only loans can be useful for property investors who want to maximise tax benefits or cash flow. But for owner-occupiers:

• They delay repaying the actual debt.

  
  

• After the interest-only period ends, repayments jump significantly.

  
  

• You pay more interest overall and delay building equity.

  
  

Unless it’s part of a well-planned investment strategy, it’s usually better to stick with principal and interest repayments.

9. Limit Redraws (Unless Absolutely Necessary)

Redraw facilities are great for emergencies, but using them too often can undo your progress.

• Every dollar you withdraw increases your loan balance.

  
  

• If you're making extra repayments but constantly dipping into your redraw, you’re treading water instead of moving forward.

  
  

• Use redraw only for critical expenses or planned investment purposes.

  
  

Set a clear rule: if you redraw from your home loan, aim to repay it as soon as possible.

10. Set a Goal and Review Annually

Set a clear goal for when you want your home loan fully repaid — and track your progress yearly.

• Review your loan annually: interest rates, features, lender performance.

  
  

• Look for opportunities to refinance, increase payments, or adjust strategies.

  
  

• Keep motivated: the closer you get to paying off your loan, the more financial freedom you’ll enjoy.

  
  

You can even use online mortgage calculators to visualise the impact of changes.

Every Extra Dollar Counts

Paying off your home loan faster doesn’t always mean making huge sacrifices. Often, it’s about making smarter financial decisions, being consistent, and taking advantage of features your loan already offers.

If you’d like help reviewing your current loan, comparing lenders, or planning your path to an early payoff, I’m here to help.

Book a chat today to explore how you can shave years off your home loan and start building wealth sooner.