How to pay off your mortgage faster
A home loan is designed to run for decades, but you are not obliged to take that long. Small, consistent changes to how and when you repay can shave years off the term and save a meaningful amount of interest. This guide covers the levers that actually move the needle, and how to choose the ones that fit your cash flow.
Last updated July 2026Why extra now saves so much later
Home loans are front loaded with interest. In the early years most of each repayment covers interest rather than reducing the balance. Anything you pay above the minimum comes straight off the principal, so it stops being charged interest for the entire remaining life of the loan. That is why an extra amount paid early is worth far more than the same amount paid near the end.
The main levers, compared
| Strategy | How it works | Best for |
|---|---|---|
| Extra repayments | Pay more than the minimum, reducing principal directly | Anyone with a regular surplus and a variable or flexible loan |
| Offset account | Savings held in a linked account reduce the balance interest is charged on | People who keep a cash buffer and want it to stay accessible |
| Fortnightly repayments | Half the monthly amount every fortnight, so you make the equivalent of an extra month a year | Salary earners paid fortnightly who want a set and forget method |
| Lump sums | Direct a tax refund, bonus or windfall onto the loan | Irregular income and one off amounts |
| Rate review | Negotiate a lower rate but keep repayments the same, so the gap pays down principal | Anyone who has not checked their rate in a year or more |
Extra repayments
The simplest method is to round up or add a fixed extra amount to every repayment. Because it comes off the principal immediately, even a modest weekly top up compounds into years off the term. Before you start, check two things: that your loan allows extra repayments without penalty, which most variable loans do, and whether a fixed loan caps how much extra you can pay each year.
Use an offset account
An offset account is a transaction account linked to your loan. Every dollar sitting in it reduces the balance you are charged interest on, without locking the money away. If you keep a meaningful balance, the interest saved can rival chasing a slightly lower rate, while your cash stays available for emergencies. It only helps if you actually maintain a balance, so be honest about your spending. See the glossary for how offset and redraw differ.
Switch to fortnightly repayments
There are twelve months in a year but twenty six fortnights. If you pay exactly half your monthly repayment every fortnight, you make twenty six half payments, which equals thirteen monthly repayments instead of twelve. That quiet extra month each year, applied to principal, can trim years off a long loan. Confirm your lender credits the payments this way rather than simply holding them.
A word of caution on fortnightly plans: the benefit only appears if the fortnightly figure is half the true monthly amount. Some lenders quote a lower fortnightly number that does not add up to a thirteenth payment, so check the maths.
Put lump sums to work
Tax refunds, work bonuses, gifts and other windfalls are natural candidates for the loan. Directed at the principal early, a single lump sum keeps saving you interest for years. If you prefer to keep the money reachable, park it in an offset account instead, where it reduces interest while staying liquid.
Review your rate, keep your repayment
If you negotiate or refinance to a lower rate, resist the temptation to drop your repayment to the new minimum. Keep paying the old, higher amount and the difference goes straight to principal. This pairs well with a switch, so read when refinancing is worth it and the step by step refinancing guide before you move.
A caution on paid schemes
You do not need to pay a third party to do any of this. Every strategy here is something you can set up directly with your lender, usually for free. Be wary of paid mortgage reduction services that promise to slash your loan for a fee, which is covered in the mortgage reduction guide.
Frequently asked questions
Is it better to offset or make extra repayments?
They save interest in a similar way. Extra repayments reduce the balance permanently but can be harder to access, while an offset keeps the money available. Many people use extra repayments for discipline and an offset for their emergency buffer.
Can I make extra repayments on a fixed loan?
Often only up to an annual cap. Fixed loans commonly limit how much extra you can pay each year and may charge break costs if you exceed it. Check your loan terms first.
Should I pay off the mortgage or invest instead?
That depends on your rate, your goals and your appetite for risk, and it is a question for a licensed adviser who knows your situation. Paying down a loan is a guaranteed saving at your loan rate, which many people value for its certainty.
Keep reading
Find spare cash with the budget planner, understand true loan cost through the comparison rate, or see how a lower rate helps in refinancing your home loan.
Sources: Australian Securities and Investments Commission (ASIC) MoneySmart, guidance on paying off your mortgage and extra repayments.
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Master Mortgage Broker Sydney is an independent education website. It is not a mortgage broker, does not arrange loans and does not provide financial or credit advice. Content here is general in nature and does not consider your personal objectives, situation or needs. Always confirm details with a licensed professional before acting.