Most home loans run for 25 or 30 years, but you don’t have to take that long to pay yours off. A few small changes — paying a little extra, switching to fortnightly repayments, or using an offset account properly — can shave years off your loan and save you tens of thousands of dollars in interest. Here’s how to pay off your mortgage faster, starting with the moves that make the biggest difference. Moneysmart, the government’s free money guide, has a short guide to paying off your mortgage faster that covers the same basics.
The examples in this article use a $600,000 loan over 25 years at 6.50% — your numbers will differ, but the pattern holds at any loan size: the sooner extra money goes onto the loan, the more interest it saves.
1. Pay a little extra, as often as you can
This is the single most effective thing you can do. Every extra dollar you pay comes straight off the amount you owe, so you pay less interest from that day on — and because interest is worked out daily on your balance, the saving compounds over the life of the loan.
You don’t need a big amount. On a $600,000 loan over 25 years at 6.50%, the minimum monthly repayment is about $4,051. Paying just $100 extra a month cuts roughly 17 months off the loan and saves around $41,600 in interest. Pay $200 extra a month and you finish about two years and eight months early, saving roughly $77,400.
The trick is to make the extra payment automatic. Set up a slightly higher direct debit on payday so the money never sits in your spending account. If money is tight, start with $50 a month — even that beats paying the minimum. You can always increase it later when your pay goes up.
2. Switch to fortnightly repayments
If you pay monthly, try paying half your monthly amount every fortnight instead. There are 26 fortnights in a year, so you end up making the equivalent of one extra monthly repayment each year — without feeling like you’ve paid anything more.
On that same $600,000 loan at 6.50%, switching from monthly to fortnightly repayments saves around $121,000 in interest and gets you mortgage-free about four years and two months sooner. It’s one of the easiest wins there is, and most lenders let you change your repayment frequency with a quick call or a few clicks in online banking.
This works best if you get paid fortnightly, since the repayment lines up with your pay cycle. If you’re paid weekly, weekly repayments work the same way.
3. Put lump sums straight onto the loan
Tax refund, work bonus, inheritance, a sold car — whenever a lump sum lands in your account, think about putting some of it on the mortgage before you spend it. Lump sums early in the loan are worth the most, because in the early years most of your repayment goes to interest rather than the loan itself.
For example, putting a $10,000 lump sum onto a $600,000 loan five years in saves about $25,800 in interest and cuts around nine months off the loan. Even a $2,000 tax refund paid in during the first year saves roughly $7,400 in interest and about two months.
Just check your loan terms first. Most variable rate loans allow unlimited extra repayments, but fixed rate loans often cap them — commonly at $10,000 a year — and going over the cap can attract fees.
4. Use an offset account properly
An offset account is a transaction account linked to your home loan. The money in it is subtracted from your loan balance when the lender works out your interest, so you pay interest on a smaller amount. If you have a $500,000 loan and $20,000 in your offset account, you only pay interest on $480,000.
To get the most out of it, have your pay deposited into the offset account and keep your everyday spending money there too. Every dollar sitting in the offset is a dollar you’re not paying interest on, and the money is still yours to spend whenever you need it. That flexibility is the big advantage over paying extra straight onto the loan. Read our guide on what an offset account is and how it works if you’re not sure whether yours is set up right.
One warning: if your offset balance is usually low — say under $10,000 — the feature may not be worth paying extra for, since offset accounts often come with a higher rate or an annual fee. Do the sums for your own balance.
5. Let your redraw facility work for you
A redraw facility is the other way to put spare cash to work. Any extra repayments you make above your minimum sit in the loan as available redraw, reducing the balance that interest is charged on. Unlike an offset account, the money isn’t in a separate account — it’s part of the loan — but you can usually pull it back out through online banking if you need it.
Redraw suits people who want to pay extra but like knowing they can get the money back in an emergency. Just remember the trade-off: the money belongs to the loan, not to you, and the lender sets the rules for getting it back. Some lenders have minimum redraw amounts or daily limits, and a few still charge a fee per redraw. If you want the full comparison, see our guide on offset account vs redraw facility.
6. Check your rate — and ask for a better one
A lower rate does the same work as extra repayments, but without you paying a cent more. Rates on variable home loans can differ by more than 2% between lenders, and even a 0.5% difference saves thousands over the life of a loan.
Start by checking what rate you’re actually on, then compare it with similar loans. If you find a better rate elsewhere, ring your lender and ask them to match it — many will, because keeping you is cheaper than losing you. The Reserve Bank lifted the cash rate to 4.85% on 3 November 2026, its fifth rise this year, so if your lender has passed the increases on, it’s a good time to check you aren’t paying more than you need to.
If your lender won’t budge, refinancing to another lender is worth considering. Just weigh the costs first: discharge fees, application fees and valuation fees can add up, so make sure the saving is bigger than the cost of switching. And if you refinance to a lower rate, keep your repayments at the old, higher amount — that turns the rate cut into extra repayments automatically.
7. Review your loan every year
Rates and loan products change all the time, and a loan that was competitive three years ago might not be now. Put a yearly reminder in your calendar to check your rate, your features and whether the loan still suits you. Ask yourself: am I using the offset? Have I built up redraw I forgot about? Is there a cheaper loan with the same features?
While you’re at it, avoid interest-only repayments if you can. With an interest-only loan you only pay the interest for a set period, so your debt doesn’t go down at all — and you end up paying more interest over the life of the loan. Principal and interest repayments are slower to feel, but they’re what actually gets you mortgage-free.
What to watch out for
Paying off your mortgage early is almost always a good idea, but check a few things first:
- Fixed rate limits: fixed loans usually cap extra repayments, commonly at $10,000 a year. Paying more than the cap can attract fees, and breaking a fixed loan early can mean break costs.
- Discharge fee: when the loan is fully paid off, your lender charges a fee to remove the mortgage from your property title — usually around $350 to $500.
- No exit fees on variable loans: lenders can’t charge exit fees on variable rate home loans taken out after 1 July 2011, so switching a variable loan is cheaper than it used to be.
- Keep a buffer: don’t pour every spare dollar into the mortgage if it leaves you with no emergency fund. Money in an offset account stays accessible; money paid straight onto the loan is harder to get back.
Frequently asked questions
How much extra do I need to pay to make a real difference?
Less than you’d think. On a $600,000 loan over 25 years at 6.50%, an extra $100 a month saves about $41,600 in interest and cuts around 17 months off the loan. Even $50 a month makes a visible difference over 25 years.
Is it better to put extra money in an offset account or pay it straight off the loan?
Both save the same interest while the money is there. The difference is access: money in an offset account is yours to spend any time, while extra repayments on the loan sit in redraw, which the lender controls. If you might need the cash, the offset is more flexible. If you won’t touch it, paying it straight off the loan is simpler.
Can I pay off my mortgage early without penalties?
On most variable rate loans, yes — extra repayments are unlimited and free. On fixed rate loans, extra repayments are usually capped (commonly $10,000 a year) and breaking the fixed term early can attract break costs. Check your loan contract or ask your lender before paying a large lump sum on a fixed loan.
Does paying fortnightly really help?
Yes. Paying half your monthly repayment every fortnight adds up to one extra monthly repayment a year, because there are 26 fortnights in a year. On a $600,000 loan at 6.50%, that saves around $121,000 in interest and cuts more than four years off the loan.
The fastest way to pay off your mortgage is usually a combination: fortnightly repayments, a small automatic extra amount, lump sums when they come in, and your pay sitting in an offset account. None of them needs a pay rise or a lifestyle overhaul — they just need to be set up once and left to run.
