Paying off a mortgage early can save a significant amount of interest and bring forward the day you own your home outright. There's no single trick to doing this — it's really a combination of small, consistent habits. Here are the main strategies people use, along with realistic considerations for each.
Make Extra Repayments When You Can
The most direct strategy is simply paying more than the minimum required repayment. As covered in our guide on how extra repayments reduce interest, even modest additional amounts can shorten your loan term meaningfully over time, especially if you start early.
Increase Your Repayment Frequency
Switching from monthly to fortnightly repayments (where each fortnightly repayment is half the monthly amount) results in the equivalent of one extra monthly repayment each year, since there are 26 fortnights but only 24 half-months. This is a popular, low-effort way to chip away at a loan faster, though it's worth confirming your lender calculates it this way rather than simply dividing your monthly repayment by two.
Use an Offset Account Effectively
If your loan has an offset account, keeping your everyday savings and salary in it reduces the balance interest is calculated on, without locking your money away. Over time, this can have a similar effect to making extra repayments, while keeping your funds accessible.
Put Windfalls Toward Your Loan
Tax refunds, bonuses, or other one-off amounts are often good candidates for extra repayments, since they aren't part of your regular budget and won't affect your day-to-day cash flow. Even a single well-timed lump sum, made earlier in the loan, can meaningfully reduce total interest.
Review Your Interest Rate Periodically
Over the life of a loan, it's worth periodically checking whether your rate remains competitive, and whether refinancing to a lower rate could free up money to put toward extra repayments. Even a modest rate reduction, redirected into extra repayments, compounds over time.
Set a Realistic, Sustainable Pace
The most effective early repayment strategy is usually one you can sustain, rather than an aggressive plan that strains your budget. Small, consistent extra repayments over many years tend to add up to more than a short burst of large repayments that isn't maintained. Use the Smarter Mortgage Calculator to test a few realistic extra repayment amounts and see the long-term impact of each.
- Extra repayments, more frequent repayments and offset accounts all reduce interest in similar ways.
- Windfalls like bonuses or tax refunds are natural candidates for one-off extra repayments.
- Periodically reviewing your interest rate can free up money for faster repayment.
- A sustainable, consistent pace usually beats an aggressive plan you can't maintain.
This article provides general information only and does not constitute financial, credit, legal or tax advice. Lending criteria, fees and loan conditions vary. Consider speaking with a lender, mortgage broker or appropriately qualified professional before making financial decisions.