How to Pay Off Your Mortgage Faster

Owning a home is a huge financial achievement, but paying off your mortgage early can bring even greater satisfaction and financial security. Many homeowners aspire to become mortgage-free sooner, which not only helps them save on interest but also means they can build equity faster.

Whether you're just starting your home loan journey or have been paying a mortgage for years (or even decades), there are several ways you can get ahead on your repayments and pay off your mortgage faster.

Why Should I Pay Off My Home Loan Early?

For one, it can give you total peace of mind. It will also save you lots of money on interest, as well as help you build up more equity in your home faster. Plus, becoming debt-free sooner can be especially beneficial if you’re approaching retirement, as it will give you more financial security in your golden years.

Become debt-free

When you pay off your mortgage early, you get the freedom of truly being debt-free. Without the burden of a regular monthly payment, you’ll have more disposable income to spend on other things – whether that's travel, hobbies or investing for the future. For many people, knowing that they own their home outright brings a strong sense of security and accomplishment. It can also help relieve any financial stress you’ve been having as you get closer to retirement age.

Pay less interest

The faster you pay off your loan balance, the less interest you'll pay over the life of the loan. Mortgages tend to span decades, and the amount of interest can really add up over the loan term. By making extra mortgage repayments, switching to fortnightly mortgage payments or finding a lower interest, you could reduce the total amount of interest paid and save yourself thousands of dollars in the long run.

Build equity faster

Another advantage of paying off your home loan early is that you build equity faster. Equity is the difference between the value of your home and the remaining balance on your mortgage. So, whether it’s a slow process or you instead make large lump sum payments, by reducing the principal more quickly you can grow your equity at a faster rate. This can be very helpful if you ever decide to sell or refinance your home.

How To Pay Off Your House Faster

1. Make extra repayments

Even small additional mortgage payments can make a big difference over time, helping to reduce the principal and interest loans paid. You can use our Extra Repayment Calculator to see how much time and money you can save by implementing some early mortgage payoff strategies. Lump sum payments, such as bonuses or tax returns, can also be put towards your mortgage to reduce the home loan balance. Use the Lump Sum Repayment Calculator to see how lump sum contributions can fast-track your mortgage payoff.

2. Switch to fortnightly payments

While it’s not always easy, switching to fortnightly payments can be a smart strategy to take care of your loan term faster. This works because there are 26 fortnights in a year, which means you'll end up making an extra month’s worth of payments every year – without even realising it.

3. Find a lower interest rate

It’s always worth comparing home loan rates to see if you're getting the best deal possible. Our Home Loan Comparison Calculator lets you compare two different home loans based on interest rates and loan length to find the most cost-effective option for your situation. The team at MyChoice Home Loans also have access to a wide range of lenders, which means they can help you secure the best loan for your specific needs. Whether you’re building a new Brighton home or refinancing, MyChoice Home Loans specialists can guide you through the whole process and help you find the right solution to save money and pay off your mortgage faster.

H3: 4. Setup an offset account or a redraw facility

An offset account is a savings or transaction account linked to your home loan. The balance in this account is subtracted from your loan balance when calculating the interest on your mortgage. For example, if you have a $400,000 mortgage and $50,000 in your offset account, you will only be charged interest on $350,000. How much interest you end up paying will therefore be less every time you add to this offset account. A redraw facility is a feature that can be included in your home loan. It can help you reduce interest payments and pay off your loan sooner. Redraw allows you to make extra repayments to your home loan account and take them out again if you need to.

H3: 5. Get your budget in order

Creating and sticking to a budget is a must if you want to make extra payments and pay off your home loan faster. Tracking your spending and spotting where you can cut back can help free up more money to put towards your mortgage. There are plenty of budgeting tools available, including our Budget Planner, which can help you manage your finances smarter. Even small lifestyle changes, like cutting back on subscription services or finding better deals on your electricity and gas, can save you hundreds of dollars a year – money that can be redirected towards extra payments.

H3: 6. Rent out a room to increase income

If you have extra space in your home, renting out a room can be a great way to generate some extra income and pay off your home loan faster. Using this rental income to make extra mortgage repayments means you can reduce the principal on your loan and save on interest.

H2: Talk to a Professional

Paying off your house faster isn’t impossible – in fact, for many Australians it’s a goal that’s well within your reach. However, but it does require some good planning and lots of commitment.

It's always a smart idea to speak to a financial advisor or mortgage broker to make sure you're doing the right things financially to get where you want to be. A professional can help you understand the complexities of paying down your home loan and create a strategy to suit your financial ambitions. They can also give you insights into whether you should make extra payments, refinance or use other methods to pay off your loan term faster.

You can contact the team at MyChoice Home Loans as they can guide you through the whole process and help you find the right solution to save money and pay off your mortgage faster.