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9 Easy To Follow Steps On How To
Pay Off Your Mortgage Fast

How to pay off your mortgage fast - Young woman in a white night dress dancing for joy on a beach

How to pay off your mortgage fast, can be a challenge.

For most people, their home is their biggest asset. But it’s also a huge financial responsibility.

A mortgage is a huge debt that can take years, even decades, to pay off. So why would anyone want to pay it off faster? There are actually a few good reasons to do so.

The More You Pay, the Less You Pay

First of all, the sooner you pay off your mortgage, the fewer total interest charges you’ll have to pay over the life of the loan.

Secondly, owning your home outright gives you a lot more financial flexibility. You’ll no longer have to worry about making a monthly mortgage payment or being at risk of foreclosure if you hit a rough patch.

Finally, finding out how to pay off your mortgage faster is a great way to build equity and wealth over time. If you’re looking to buy an investment home, paying off your mortgage debt fast can help you reach your goals sooner.

So if you’re ready to get serious about taking years off your loan, here are a few tips to help you get started.

It Pays to Have a Workable Plan

As higher interest rates continue to loom on the horizon, many people are (rightfully) concerned about what that will mean for their long term financial situation.

But there is no need to panic! There are a number of strategies on how to pay off your mortgage fast to ensure you can still comfortably manage your mortgage loan, and even pay it off faster than ever before.

The good news is, with a little bit of effort and creativity, you can supercharge your mortgage repayments and get rid of that pesky home loan balance sooner than most think possible!

Table of Contents

    1. Grasping the Basics of How to Pay Off Your Mortgage Fast
    2. Refinancing – Home Loan Interest Rates are on the rise – But is it Worth it?
    3. How to Pay Off Your Mortgage Faster Using a Mortgage Offset Account
    4. How to Use an Interest-Free Credit Card to Pay Off Your Mortgage Faster
    5. Buy a Smaller Home and Have a Home Loan That Fits Easily Into Your Budget
    6. Make an Extra Lump Sum Payment Whenever Possible
    7. Utilise a Pay Fortnightly plan
    8. Debt Consolidation Loans
    9. Reducing the Loan Term Will Payu the Mortgage Off Faster
    10. How to Pay Off Your Mortgage Fast
      Using Investment Properties
  1. The Best Mortgage Brokers are Becoming More in Demand Every Day

    Mortgage broker sitting at a desk doing calculations on his calculator

    So if you’re looking for ways to save money and become financially free, discovering ways to pay down your home loan balance faster is a great place to start.

    Recent surveys in Australia have shown that almost 70% of all mortgage applications now go through mortgage brokers.

    Talk to the best mortgage broker you can locate about ways to get the best deal and other strategies on how to pay off your mortgage quicker so that you can start reaping the benefits of being mortgage-free sooner than later.

    In this article, we’ll explore nine ways that show how to pay off your mortgage fast. Scroll down and find out how you can take control of your mortgage today!

    Grasping the Basics of How to Pay Off Your Mortgage Fast

    Message on graphic saying - the truth abot 30 year mortgages

    If you’re like most people, you probably don’t spend a lot of time thinking about your home loan. After all, it’s just a loan that lets you buy a house, right? NOT SO FAST!

    There is so much more to a mortgage than that. For starters, have you ever wondered why it takes 30 years to pay off a mortgage? I mean, think about it – most other loans are paid off within 5-10 years. Why do home loans last so much longer?

    What Lenders Don’t Really Want You to Know

    Well, the answer is simple: lenders want to make as much money as possible from you! See, with a shorter-term loan, they would get their money back sooner, but with a longer loan, they can charge you more interest.

    Yes, there are other factors at play, such as a 30-year loan allows you to borrow more money and buy a higher-priced house. However, there are all kinds of dynamics at work there and I won’t get into that debate in this article.

    A mortgage today ‘is what it is’, so we’ll just stick to the basics of how you can pay off your mortgage early.

    The Truth About 30 Year Mortgages

    In fact, as interest rates rise and over the course of a 30-year mortgage, you could end up paying back more than twice the amount of the original loan – in other words, the lender will make a tidy profit from you!

    Einstein has been credited with the quote; “Compound interest is one of mankind’s most ingenious inventions”.

    Can You Ever Win?

    Because banks understand this, all so well, they structure their compound interest mortgages in such a way that for most of the first half of your 30-year mortgage term the bulk of your regular monthly repayments are made up of interest to the bank

    That’s why after the first five to six years when you look at your home loan statement you look at it in despair and wonder why the principal balance doesn’t seem to be going down much at all. It can at times feel like you’re trying to climb up a very slippery slope.

    Don’t Get Stuck in the Refinancing Cycle

    Then, to exacerbate matters further, most home loans only last 5-7 years because people move or refinance for different reasons and they start the 30-year term all over again.

    The key to getting ahead with your home loan is to understand how it all works. Once you do that, you can start making some changes that will help you get rid of your home mortgage lender that much sooner.

    Refinancing – Home Loan Interest Rates are on the Rise –
    But, is it Worth it?

    Graphic showing a see saw with coins on one end and a toy house on the other end -with the message - refinancing - when is it worth it

    Refinancing home loans is a hot topic these days, with many homeowners looking to find a lower interest rate. But what exactly does refinancing entail? And, how can it help you pay off your mortgage faster?

    When you refinance your mortgage, you essentially take out a new loan with a lower interest rate. This gives you two great benefits: first, it delivers substantial interest savings over the life of the loan; and second, it lowers your monthly payments. Both of these factors can help you take years off your loan.

    There May Be Reasons for You to Avoid Refinancing

    Of course, there are some drawbacks to refinancing. For one thing, there will be some costs: you’ll have to pay transfer and settlement costs on the new loan, and you will also have to pay a discharge fee on your old loan.

    Additionally, it can be time-consuming: the process of getting approved for a new loan and settling on it can take several weeks. Although, if you’re determined about paying off your mortgage as quickly as possible, refinancing is definitely worth considering

    Same Term, Same Repayment – Shorter Loan terms Save Money

    It could also be in your interest to look at the possibility of refinancing your home loan into a shorter term than the traditional 30 year loan term. Depending on your reasons for refinancing you can look into refinancing your loan into the same term that remains on your current loan term.

    You can look at the savings you are making by refinancing to a lower rate and consider adjusting to a lower loan term that provides not only more comfortable repayments but also starts to reveal to you how much faster you can pay your mortgage off.

    Get the Best Financial Advisor For Mortgages

    Mortgage brokers can not only help you find a lower rate mortgage, but they can also quickly show you if it is in your financial interest to do so. In other words, they will show you if the financial savings of fees, charges, adjusting the loan term, or anything else makes sound financial sense for your personal situation.

    By the way, under the recent Best Interests Duty legislation, it is mandatory these days for mortgage brokers to act in your best interests. Be aware that banks are not required and are not beholden to that legislation.

    Any refinance fees and charges can usually be capitalised onto the loan, so you don’t have to reach into your emergency fund to pay them.

    How to Pay Off Your Mortgage Fast Using
    a Mortgage Offset Account

    Image showing an ascending row of coins ending with a full jar of coins with a sprout on top with the message - offset accounts - interest saved is interest earned - tax free

    Why Offset Accounts are Worth Considering

    First, for those that are not familiar with mortgage offset accounts; An offset account can be used like any regular bank savings or transaction account.

  2. The major difference is that any money sitting in that offset account balance will offset against your home loan balance and reduce the amount of interest that is charged to your account.

    For example, let’s say two net pay amounts of $6,000 each ($12,000) are credited into an offset account linked to a mortgage of $610,000, you will only be charged interest on $598,000, while all of the $12,000 is in the offset account.

    Of course, going forward, some or all of that money will be used to cover expenses. However, they now calculate the interest on mortgage balances daily and then charge it to your principal balance monthly in arrears.

    You Don’t Pay Interest On the Full Loan Amount

    Therefore, as you pay expenses going forward, whatever the offset account balance is on a daily basis(no matter how small) it will still be incrementally credited against your mortgage balance and reduce the interest being charged day to day to your account.

    The efficient use of a mortgage offset account can help you save many thousands of dollars off the life of a loan.

    ‘Interest Saved is Interest Earned, Tax-Free’

    In other words, if you tried to get comparable returns by putting your money into a savings account you would be challenged to get the same rate of return.

    First, interest rates on savings are always usually lower than mortgage rates, because banks make money by taking your money and lending it to would-be borrowers.

    Secondly, any interest earned on savings has to be declared to the taxman.

    How Much Could You Save?

    Here are a couple of things to keep in mind when using a mortgage offset account;

    Make sure to make regular deposits into the account. The more your offset account balance is, the greater the offset will be.

  3. That said, remember that the offsets only apply to the principal balance of your loan – they won’t reduce any fees or penalties you may owe.

    With a little planning and discipline, a mortgage offset account can be a great way to save money and pay off your home loan faster.

    How to Use an Interest-Free Credit Card to
    Pay Off Your Mortgage Faster

    Young woman holding up a credit card in one hand and a calculator in the otherIf you’ve been looking for a creative way for how to pay off your mortgage faster, look no further than your trusty credit card.

  4. Most credit cards these days allow you up to a 45-day interest-free period on your purchases.

    Reduce Debt and Save On Your Mortgage – the Smart Way

    By taking advantage of a credit card with an interest-free period, you can effectively give yourself a short-term interest-free loan that can be used to pay down your mortgage principal.

  5. Of course, this only works if you’re disciplined enough to pay off your entire balance before the interest-free period expires.

    What you do is, you put as many of your ongoing living expenses onto the credit card in order to avoid taking the money for those expenses out of your offset.

  6. If you have a large one-off expense, try doing the same, put it on the interest-free credit card, and have it swept back into the offset account at the end of the interest-free period.

    By taking advantage of the credit card interest-free period, you effectively give yourself an interest-free loan that can help you pay off your mortgage faster.

  7. The idea is, that you’re able to leave all or most of your pay in the offset account during the interest-free period, allowing it to offset and save interest on your home loan.

    Just make sure you keep a close eye on your credit card balance and don’t get caught with a hefty credit card debt beyond the interest-free period.

    Set and Forget Tip

    To avoid accidentally forgetting to pay any accumulated credit card balance at the end of your credit card interest-free period you can inquire to your lender to see if they can put an automatic sweep in place on the credit card that will sweep any unpaid balance back into your offset account before the interest-free period ends.

    Many lenders do, but not all lenders will have this feature, but most homeowners that use it find it convenient, one less thing to think about.

    Buy a Smaller Home and Have a Home Loan
    That Fits Easily Into Your Budget

    In today’s economy,A women with a toy model house as a head and holding a smaller toy house in her right hand it’s all about location, location, location and bigger is better.

  8. But what if you bought a smaller home, to begin with? You may be thinking that a smaller home won’t keep you up with the Jones.

    But, if you’re family situation (size) allows for it and you’re looking to pay off your mortgage as quickly as possible, buying a smaller home can be a huge boost to your finances if you’re looking to create equity faster! Here’s how:

    Why Buying a Smaller Home can be a Huge Boost to Your Finances

        • A smaller home will have a smaller mortgage. This means that you’ll have less interest to pay over the life of your loan.
        • There’s no need to worry about making those big mortgage payments each month when you can downsize and use that extra cash to pay off your home loan much faster.
        • Think about it – with a smaller home, you’ll have fewer square meters to maintain and fewer rooms to furnish.
        • A smaller home will be easier to keep up with repairs and maintenance. This means, that you won’t have to spend as much money on things like painting and repairs. This means, more time and money for other things – like taking care of the mortgage.
        • A smaller home will be easier to sell when you’re ready to move on. This means, that you’ll get more of your investment back when it comes time to sell.
        • And don’t worry about what the Jones are doing or what your friends think or say because you’ll be the one laughing 10-15 years down the track.

    Apply the Snowball Method When Buying Real Estate

    You will build equity much faster as you will have more money going toward extra principal payments and less of your hard-earned going to the bank in lost interest payments.

    By building equity faster through purchasing a smaller home and taking on a smaller mortgage in the beginning. You can always up-size at a later time.

  9. The extra equity you would have already created can allow you to leverage into a larger home with a not-so-large mortgage (win-win).

    The 1%’ers Secret of Building Wealth

    So if you’re looking to buy a smaller home, don’t let the size fool you – if you’re looking to save money, and insulate your future financial security by paying your mortgage off faster, buying a smaller home can definitely show you how to pay off your mortgage fast.

    Mortgage Offset Account Calculator

    Make an Extra Lump Sum Payment Whenever Possible

    Go the extra mile written in white chalk on a gtainy charcoal backgroundMaking extra payments on your home loan can be a great way to save money in the long run. By paying down your principal balance, you’ll reduce the amount of interest you’ll pay over the life of the loan.

  10. And, if you make additional payments regularly, you could potentially shave years off your repayment schedule.

    This can Save Significant Interest and Shave Years off Your Repayments

    Some options include making a lump sum repayment whenever you can. For example, windfall money, like when you receive a bonus at work or a tax refund, maybe you can sell unused items around the house over the internet or through a garage sale and you can apply that money towards your mortgage principal.

    During these days of high inflationary pressures, Analyze your budget and see if there are adjustments you can make that will free up extra money that can be used to pay down your mortgage faster.

    Don’t Wait! Pay Down Your Mortgage Today

    Over the last decade, we have been spoiled with record low-interest rates. Now, for the time being at least, those days seem to be over.

  11. It could be a smart move to tighten the proverbial belt and find extra to pay the home loan down before interest rates go even higher.

    Of course, there are other benefits to consider as well. For instance, making extra repayments can help improve your credit score by lowering your debt-to-income ratio.

    You’ll Save Money and Become Debt Free Sooner

    And, if you find yourself in a financial bind down the road, you’ll have some extra equity built up to tap into.

  12. So, if you’re looking to save some money and become debt-free sooner, consider making extra repayments on your mortgage. It just might be the smartest financial move you ever make.

    Finally, consider using any extra money you have to pay down high-interest debt first, such as credit cards or student loans. By doing so, you can save even more money in the long run.

    Utilise a Pay Fortnightly plan

    For many of us, theMiddle aged man standing in his front yard and looking back at his house with pride dream of owning our own home is just that – a dream.

    While there are many different ways that can demonstrate how to pay off a mortgage quicker, some methods are more effective than others.

  13. One popular method is to pay fortnightly instead of monthly repayments.

    One of the Easiest Ways to Pay Off Your Mortgage Faster

    Here’s how it works: by making biweekly mortgage payments instead of once a month, you’ll end up making 26 payments per year instead of 12. This may not seem like much, but it can add up to big savings over the life of your home loan.

    And what’s more, you’ll be able to pay off your mortgage faster and get out of debt sooner. So if you’re looking for a way to make your home ownership dreams come true, a bi-weekly payment plan may be the answer.

    The Little Known Trap That Could Cost You Thousands

    However, be careful as there can be a trap for young players here. When you go to the bank and ask them to convert your mortgage payments to biweekly repayments they will more than likely divide your annual payment amount by 26 (fortnights).

    That’s not the right move, as that method doesn’t make you any better off.

    No, what you want is for them to divide your minimum monthly repayment amount by 2 and convert the amount calculated to a regular biweekly repayment.

    Use Biweekly Payments and Become a Free and Clear Homeowner Faster

    Because now you have taken half of the monthly (30-31 days) amount and converted that to a 14-day (2 weeks) amount.

  14. As there are 4.3 weeks in a month you end up over a one-year period making one full month’s extra repayment in advance.

    So, you’ll end up making one extra monthly payment by the end of the year, which can save you hundreds of dollars in interest and help you pay off your loan faster.

    Of course, you’ll need to be disciplined about making your extra repayments on time, but if you can stick to the plan, you’ll be well on your way to becoming a homeowner free and clear.

  15. So, why delay, switch to bi-weekly payments today?

    Debt Consolidation Loans

    Fully clothed man standing on the beach with the water and the sun behind him raising his hands in joy as in debt relief

  16. It’s no secret that money is tight these days. With the cost of living rising and wages staying static, it can be difficult to balance the monthly budget, let alone save for a rainy day.

    One way to ease the financial burden is to consolidate consumer debts. By taking out a debt consolidation loan and using it to pay off outstanding higher interest rate debts, it can reduce monthly outgoings and free up some extra cash.

  17. In turn, this can help pay off your mortgage faster.

    Get Help Understanding if Consolidation is Right for You

    Of course, consolidating debts is not a magic bullet. Borrowers will still need to be disciplined with their spending and ensure that they make their loan repayments on time.

    While debt consolidation loans can help save money on interest payments, it doesn’t necessarily mean it’ll pay off a mortgage any faster.

  18. In fact, depending on how much debt there is and what kind of interest rates are being paid, consolidating debts could actually end up costing more in the long run.

    Watch Out for These Two Traps for Young Players

    First, is where you take short-term debts, like personal loans and credit card balance debt, and refinance them into a longer loan term.

    Yes, you will have less to pay in monthly repayments after refinancing high-interest rate debt into low-interest rate debt, But, what will many do with those extra dollars they find in their pocket every month?

    Yes, You Guessed it, They’ll Indiscriminately Spend it.

    The smart financial savvy thing to do of course is to use that newfound cash to pay down the mortgage even faster.

    Secondly, once the personal loan and credit card balances have been cleared some will go out and just use those credit resources all over again, OUCH!

    Those people are in danger of ending up in a never-ending debt spiral until they come in for the inevitable crash landing.

    Talk to Your Mortgage Broker Today

    So, while debt consolidation loans might look like a good idea for some people, it’s not necessarily the best option for everyone.

  19. Ultimately, whether or not consolidating your debts will help you pay off your mortgage faster is something you’ll need to hold your own counsel on.

    However, if you are struggling to keep on top of your debts, consolidating them to lower home loan interest rates may be a helpful solution.

  20. So, talk to your mortgage broker today and they will help you to see if consolidation can work for you.

    Reducing the Loan Term Will Pay the Mortgage Off Faster

    Short Term Vs Long Term Mortgage

    The words Short Term Loan on a blackboard type sign alongside of stacks of coins - signifying - The shorter the loan The less you payAnother strategy that will show you how to pay off your mortgage faster, is to consider reducing your loan term. It’s pretty simple really.

  21. After all, the shorter the loan, the less you’ll have to pay in interest. And while that’s technically true, there are a couple of things to consider before making the decision to go with a shorter loan.

    You’ll need to make sure that you can afford the higher monthly payment that comes with a short term mortgage. If you’re not careful, you could find yourself struggling to make your payments – which could lead to defaulting on your loan entirely.

    Get Expert Advice Before Changing your Mortgage Term

    So before you decide to reduce the term of your mortgage, be sure to enlist the assistance of your mortgage broker and have them show you the best way to weigh up all of the pros and cons.

  22. Otherwise, you could end up costing yourself more in the long run.

    However, should you refinance to a lower interest rate than what you’re already paying, you could shorten the loan term to where your monthly repayments remain the same as they were before the refinance.

  23. That would reduce the principal balance faster and save a lot of money.

    Get a Savvy Mortgage Broker to Help You Make the Right Decision

    Have a chat with your mortgage broker who will calculate the numbers for you and see if the results will comfortably fit into your lifestyle.

    Plus, it’ll feel great to have that peace of mind! So if you’re looking to get out of debt as quickly as possible, reducing your mortgage term is another great way to do it.

    How to Pay Off Your Mortgage Fast
    Using Investment Properties

    A man relaxing sitting cross legged and leaning back in a lush green meadow with a laptop in his lap allowing the sun to wash over his face

  24. Some Say the Best is Saved Until Last

    If you’re like most people, your mortgage is one of the biggest expenses you have each month. But what if there were a way to make your home loan work for you? That’s where property investing comes in.

    By using the equity in your home to purchase a positive cash flowed investment property (without dipping into your pocket or savings), you can not only pay off your mortgage faster but also build up a nest egg of retirement savings.

  25. And best of all, you can do it without having to put down any additional money.

    Making Your Home Loan Work for You

    So, if you’re looking for a way to get ahead financially, an investment property is well worth considering.

    This is a more advanced strategy, but it can be where the rubber really hits the road when it comes to creating financial freedom for yourself and your family.

    We’ve just been through the Corona Virus pandemic and it seems the rental property vacancy market in Australia is in Crisis everywhere you care to look.

    Rents Are on the Rise

    Rental vacancy rates are at their lowest in decades with seemingly more bad news to come as the international borders are opening up.

  26. Rental yields on investment properties are starting to increase sharply throughout the country.

    For most people, the thought of investing in property is a distant dream. It conjures up images of all the what if’s; can I afford it, what if I lose my job, what if I get the tenant from hell?

  27. And, expensive houses in wealthy suburbs are enough to make even the most ambitious among us give up before we start.

    Creative Ways to Use Property Investing to Achieve Your Financial Goals

    However, there are plenty of ways to get started in property investing without breaking the bank. In fact, with a little bit of creativity and some elbow grease, you can use property investing to pay off your mortgage faster.

  28. Here’s how: Start small: The first step is to forget about those luxurious suburban houses and look for more affordable options. There are plenty of deals to be had if you’re willing to look in lower-priced areas.

        1. Also, if you’re the handy type and can fix up properties that need some work that could be a bonus, but not imperative. Further, you will find most lower-priced properties will have better rental yields than most of those mansions. Consequently, it can be easier to get positive cash flow from them.
        1. Use leverage: When you invest in property, you can often use leverage to buy more than one property at a time, or more frequently. This means that your investment capital growth will be faster, and you’ll be able to use the gains to pay off your home mortgage quicker.
        1. Create positive cash flow rental income: By building up a portfolio of positively cash-flowed properties, you will be generating positive cash flow through the rental income and tax benefits (like mortgage interest deduction and depreciation). This extra income can be used to make extra mortgage payments, meaning you will be able to pay it completely off that much faster.


  29. Get a Head Start on Retirement

    One great way to pay off your mortgage faster is by creating multiple positive cash flow streams. This can be done by building up a portfolio of rental properties that generate positive cash flow.

  30. Those extra income streams can then be used to make extra repayments on your mortgage, helping you get rid of your non-tax deductible home loan that much faster.

    By using the equity in your home to purchase (correctly structured) investment properties, you can not only pay off your mortgage faster but also build up a nest egg for retirement.

  31. And best of all, you can do it without having to put down any additional money (conditions apply). So if you’re looking for a way to get ahead financially, property investing is well worth considering.

    If you would like to find out how to initiate these investment strategies safely and securely get in touch and we’ll be happy to provide more detailed information.

    Wrapping it Up

    Here we’ve shown a few different ways to pay off your mortgage faster, and we’ve listed some of the most effective methods in this article.

  32. By creating positive cash flow rental income or using the equity in your home to purchase investment properties, you can say goodbye to your home mortgage company much sooner than most think possible.

    Switching to biweekly payments is one of the easiest ways to make extra progress on reducing your loan balance, and consolidating your debts can also help free up some extra cash each month. 

    However, it’s important to be mindful of how you spend that extra money, as refinancing high-interest rate debt into low-interest rate debt might not always be the best option. We recommend that you talk to your mortgage broker ASAP about which strategy can work best for you!


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