As a homeowner, you’ve taken a significant step towards building equity and creating a place of comfort and security — now, you wonder if it’s better to pay off your mortgage faster. You’ve thought being mortage-free sooner to unburden yourself from those monthly repayments and open doors to new possibilities. If you’re like most people, you dream of the day when you can finally be free of your mortgage payments.

And we have just the right stuff for you! In this blog post, we’ll dive into eight practical and proven ways to pay off mortgage faster. Stay with us to learn how to gain more control over your mortgage.

How long does it take to pay off a mortgage, usually?

The subject of how long to pay off home loan depends on individual circumstances. A regular mortgage term ranges from 25 to 30 years. However, it’s not uncommon for some individuals to opt for shorter or longer terms based on their financial circumstances and goals.

What’s in it for me if I pay off my mortgage early?

In these financially uncertain times, one would want to conserve their financial resources and hold on to them for as long as they can. So it would not make sense to make a paid off mortgage a goal right now, would it?

 But hear us out: to pay home loan faster would be in your best interest right now as it offers several compelling benefits that can vastly improve your financial health:

  • Reduce the amount of interest you will pay over the life of your mortgage and save tens of thousands of dollars.
  • Paying off mortgage early means you will accumulate home equity more quickly, which you can then use for other financial objectives like home renovations, property investments, etc.
  • You can have more disposable income to allocate towards other important goals such as saving for retirement, funding your children’s education, or pursuing your passions. With reduced financial obligations, you have the freedom to pursue opportunities that align with your dreams and aspirations.
  • Paying off your mortgage faster allows you to own your home sooner and leave a stronger financial legacy for your loved ones. It sets the stage for passing down a valuable asset and potentially provides your family with a more secure financial future.

So how to pay home loan faster? Here are 8 home loan tips

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1. Refinance to a better home loan rate

Refinancing your mortgage to a lower interest rate can lead to significant savings over time, and is arguably the quickest way to pay off mortgage. According to the Reserve Bank of Australia, even a modest reduction in interest rates can save homeowners thousands of dollars

By shopping around and securing a better rate, you can reduce your monthly repayments or maintain the same payment amount while paying off more of the principal balance. This accelerates your mortgage payoff and helps you save on interest expenses.

2. Switch to the right type of home loan (hint: try a split rate home loan!)

Choosing the right type of home loan can make a substantial difference when you pay off mortgage faster. Consider a split rate home loan, which allows you to divide your loan into fixed and variable portions. 

The fixed portion offers stability and protection against interest rate rises, while the variable portion provides flexibility for extra repayments. This hybrid approach enables you to take advantage of potential interest rate savings while maintaining repayment flexibility.

3. Make extra repayments

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Making additional repayments when paying loans beyond the minimum required amount is a powerful strategy to pay off your mortgage faster. Even small extra contributions can significantly reduce the loan term and save you substantial interest. 

For instance, making an extra monthly payment of $200 on a $300,000 loan with a 4% interest rate could shorten the loan term by over four years and save approximately $37,000 in interest.

4. Change the frequency of your repayments

Switching from monthly to fortnightly or weekly repayments can have a compounding effect on your mortgage payoff. By making more frequent payments, you effectively make more payments each year. For example, with fortnightly repayments, you make 26 payments per year (equivalent to 13 monthly payments), which helps you pay off your mortgage faster.

The Australian Securities and Investments Commission (ASIC) states that switching to fortnightly repayments can shave years off your loan term.

5. Leverage the power of a redraw facility or offset account

Utilising a redraw facility or offset account can help reduce your interest expenses. A redraw facility allows you to access any additional repayments you’ve made, providing flexibility while keeping your money working for you. 

On the other hand, an offset account is a transaction account linked to your mortgage, where the balance offsets the principal amount on which interest is calculated. By keeping your savings in an offset account, you reduce the interest payable on your mortgage, potentially saving thousands of dollars over the loan term.

6. Make small changes to your lifestyle

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Small lifestyle changes can have a significant impact on your mortgage payoff. Consider cutting down on discretionary expenses, such as dining out, entertainment, or subscription services. Redirecting these savings towards your mortgage accelerates your repayment progress. 

For instance, redirecting $100 per month towards your mortgage on a 30-year $400,000 loan with a 4.5% interest rate can reduce the loan term by approximately three years and save over $40,000 in interest

7. Consolidate your debts

Consolidating high-interest debts, such as credit card balances or personal loans, into your mortgage can be a smart move. By combining these debts into your home loan, you can benefit from the lower interest rate associated with mortgages. 

This allows you to streamline your repayments and allocate more funds towards reducing your overall debt faster.

8. Scrap the ‘set and forget’ approach

Many homeowners tend to set up their mortgage repayments and then forget about it for the duration of the loan term. However, taking a proactive approach can really help you expedite your journey to being mortgage-free. 

Interest rates fluctuate over time, and market conditions can change. By regularly monitoring interest rates and staying informed about the mortgage market, you can identify opportunities to refinance to a better rate. 

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For instance, refinancing can potentially lower your monthly repayments or shorten the loan term, helping you pay off your mortgage faster. Being attentive and proactive in seeking better deals can save you thousands of dollars in interest payments.

Many mortgage products allow for extra repayments, but it’s not enough to simply have the option available. Actively making use of these features by regularly making additional repayments can significantly reduce the principal balance and save on interest. By allocating windfalls, bonuses, or any surplus income towards your mortgage, you expedite your mortgage payoff journey.

Seek professional advice with Stryve

While it’s important to be proactive, it’s also smart to seek professional advice from mortgage brokers such as ourselves. At Stryve, we have access to market knowledge and can analyse your individual circumstances so you get tailored guidance. 

If you’re ready to be mortgage-free sooner than later, don’t hesitate to reach out to us. Click the button below for a free, no-obligation consultation with us.