Are you worried about the rising cost of living? Are you currently in the middle of your 30-year (or more) mortgage and thought to yourself “How can I pay my mortgage off faster?”?

If yes, then you should consider paying off your mortgage early to avoid dealing with long-term mortgage stress. 

According to new research by True Savings, over 40% of Australian homeowners are struggling to pay off mortgage, and around 1.5 million Aussies are under mortgage stress, most of them in Sydney which was locked down hardest during the height of the COVID-19 pandemic.

What happens when you pay off your mortgage Australia

A paid off mortgage earlier than its term is such a big financial load off any homeowner’s shoulders for the following reasons:

  • Save thousands on interest rate
  • Live in a house that is actually your own sooner since the bank no longer holds the Certificate of Title
  • No more worrying about monthly mortgage repayments
  • Have time and money to work towards your other financial goals

Paying off your mortgage early can give you peace of mind and allow you to enjoy life without worrying about whether or not you can afford your next house payment.

How to pay off a mortgage fast – PRO tips

Our mortgage broker Australia team recommends these seven pro tips to pay your mortgage off early.

1. Perform an annual home loan health check

A home loan health check is an opportunity for you to check if your current rates are still competitive and if your home loan still meets your needs.You could be paying too much on your current mortgage, and it won’t hurt to negotiate with your lender to lower your rates.A Stryve Finance finance broker can perform a home loan health check for you, for free!

2. Pay fortnightly instead of monthly

Increasing your payment frequency from monthly to fortnightly is a sure fire way of paying off mortgage early. There are 26 fortnights in a year, and paying this often can help reduce the amount of compounding interest in your loan.

3. Don’t take on an interest-only loan

Consider switching to principal and interest repayments as part of your early mortgage payment strategy. Having an interest-only loan means your principal does not reduce and when its period ends, you will have to pay the whole amount you borrowed on top of continuing interest. 

4. Increase the amount of your monthly mortgage repayment if possible

If and when you can, make extra repayments on your loan to shave years off it. Paying off mortgage by adding say $168 you save weekly from eating dinner at home to your monthly repayments will help you save on interest costs and pay your loan faster.

5. Leverage the unused features of your current loan

There could be features in your home loan that you ought to start using to reduce the interest charged on your loan. One such feature is opening an offset account linked to your home loan. An offset account is like a savings account that offsets the balance against your home loan interest. 

Picture this: You have $25,000 in your offset account, and you have a $500,000 mortgage. Your lender will only ask you to pay interest on $475,000 under the condition that your offset account balance remains untouched. 

6. Use a redraw facility

A redraw facility allows you to access extra repayments that you’ve made on your mortgage over and above the minimum required payments without paying high fees. It also reduces the interest you pay over the life of your mortgage. 

Picture this: You pay a minimum of $1,500 on your monthly repayment. You pay an extra $100 on top of it, so by the end of the year you’d have paid $1200 extra on your mortgage. This amount can be withdrawn at a later time.

7. Consider refinancing your home loan

When you refinance, you basically switch to a new home loan product to pay off your mortgage. People usually refinance to get a lower interest rate than that of their current home loan and tap into their home equity.

Ask a finance broker specialist to review your home loan and give you access to the best refinance home loan deals in the market. 

Read: Refinancing 101: Everything you need to know about Refinancing Your Home Loan

More industry secrets to pay off mortgage early? Ask a finance broker Sydney

The best finance broker takes the time to explore their clients’ needs and always strives to surpass expectations. At Stryve Finance, we provide expert advice from start to finish and get the toughest loans approved for you.

Your success is our success. Book an appointment with us and let’s discuss your goals.