Personal Finance

12 Practical Ways to Pay Off Your Mortgage Sooner

Your mortgage rate matters—but it is not the only lever you can pull. These 12 practical strategies may help reduce interest, protect your cash flow and bring your mortgage-free date closer.

Small changes today can remove years of repayments—and save tens of thousands of dollars in interest

Australians cannot control every Reserve Bank decision or movement in property prices. But homeowners do have considerable influence over the total interest they pay and how long they remain in debt.

The basic principle is simple: reduce the balance on which interest is calculated, reduce the interest rate, or do both. The earlier you act, the greater the potential benefit, because every dollar of interest avoided remains available to reduce the principal.

Here are 12 practical strategies worth considering.

1. Pay a little more than the minimum

An extra repayment does more than reduce the loan by that amount. It also prevents interest being charged on that portion of the balance for every remaining year of the mortgage.

The easiest approach is often to set an automatic repayment slightly above the minimum. Even $20 or $50 a week can make a meaningful difference over a long loan term. Before starting, check whether your lender limits extra repayments—particularly if your loan is fixed—and whether fees apply.

2. Keep repayments unchanged when rates fall

When your interest rate is reduced, your lender may lower the required repayment. If your budget permits, continue paying the old amount. The difference will go towards the principal and can shorten the loan without requiring a new sacrifice in household spending.

The same approach can work after a pay rise: direct part of the increase to the mortgage before your lifestyle expands to absorb it.

3. Use genuine fortnightly repayments

Repayment frequency can help, but the numbers matter.

Half of a monthly repayment paid every fortnight results in 26 half-payments each year—the equivalent of 13 monthly repayments. Simply dividing the annual repayment into 26 equal amounts does not create an extra repayment; it only changes the timing.

Ask your lender exactly how it calculates fortnightly payments, and confirm that the annual amount is higher before assuming this strategy will reduce the term.

4. Make windfalls work immediately

Tax refunds, bonuses, inheritances and proceeds from selling unused possessions can all reduce a mortgage balance. Applying a lump sum early generally saves more interest than applying the same amount years later.

It is sensible, however, to retain an accessible emergency buffer. Putting every available dollar into a loan and then relying on a credit card when the car breaks down can undo the benefit.

5. Make an offset account earn its keep

An offset is a transaction or savings account linked to a home loan. Its balance reduces the amount of the loan used to calculate interest. For example, with a $500,000 mortgage and $20,000 in a fully offset account, interest is generally calculated on $480,000.

Consider having income paid into the offset and paying expenses from it, so more cash sits against the mortgage for longer. But compare the benefit with any package fee, account fee or higher interest rate. An offset with a consistently small balance may not justify its cost.

ASIC has also warned borrowers to check that their offset is linked to the correct loan and delivering the promised saving. In July 2026, ASIC reported that banks had paid more than $55 million in compensation for offset failures reported during its review period. Check statements after refinancing, restructuring or changing accounts, and query anything that does not add up.

6. Understand offset versus redraw

Both features can reduce interest, but they are not identical.

Money in an offset remains in a separate deposit account. Redraw is access—subject to the loan terms—to extra repayments already made into the loan. Lenders may impose limits, delays or conditions on redraw, so it should not automatically be treated like an everyday bank account.

There can also be tax consequences if a property later becomes an investment. The ATO focuses on how redrawn borrowed money is used when determining whether related interest may be deductible. Mixing private and investment use in one loan can create complex apportionment. Obtain tax advice before redrawing for another purpose if a property is, or may become, income-producing.

7. Ask your current lender for a better deal

You do not always have to refinance to secure a lower rate. Check rates available to new customers and competing offers, then ask your lender's retention team to review your rate.

Prepare a simple comparison showing your current rate, balance, property value and repayment record. A modest rate reduction can be valuable on a large balance, and staying put may avoid discharge, application, valuation and settlement costs.

8. Refinance carefully—not automatically

Refinancing can reduce interest, improve features or consolidate the structure of a loan. Compare the comparison rate, not only the advertised rate, and calculate how long it will take for the monthly saving to recover all switching costs.

The biggest trap is restarting the clock. Moving a loan with 22 years remaining into a new 30-year term may reduce monthly repayments while increasing total interest. Ask the new lender to retain the remaining term—or choose a shorter one you can comfortably afford.

Also check fixed-rate break costs, discharge fees, application fees, annual package fees, and whether a temporary cashback distracts from a less competitive long-term deal.

9. Review the household's large recurring costs

Mortgage progress is usually made through recurring savings rather than heroic one-off cuts. Review energy, general insurance, health insurance, phone plans, subscriptions and vehicle costs at least annually. Redirect any saving to the loan automatically, so it does not disappear into general spending.

Focus first on large expenses. Cancelling one unused subscription helps, but renegotiating insurance or the mortgage rate itself may produce a much larger result.

10. Clear expensive debt first

Credit cards and personal loans often carry higher interest rates than a home loan. Paying the highest-cost debt first may save more overall than directing every spare dollar to the mortgage.

Debt consolidation can lower the immediate rate, but it becomes counterproductive if short-term debt is stretched over decades or the cleared card balance is rebuilt. If debts are consolidated into the mortgage, keep repayments high enough to clear that portion over its original shorter timeframe.

11. Check whether your loan structure still suits you

Loan features have a price. Review whether you are paying for an offset, package, credit card or multiple split accounts that you no longer use. Conversely, the cheapest basic loan may not be the best value if a well-used offset would save more than the extra fees.

Fixed, variable and split loans each involve trade-offs. Fixed loans can provide certainty but may restrict additional repayments and impose break costs. Variable loans usually offer more flexibility but expose the household to rate changes. Choose according to your cash flow and risk tolerance, not a prediction about where rates will go next.

12. Have a plan before repayments become unmanageable

Paying a mortgage faster is worthwhile only when it is affordable. Do not sacrifice essential expenses, adequate insurance or a basic emergency fund simply to reach the finish line sooner.

If repayments are becoming difficult, contact the lender's hardship team early. A lender may consider temporarily reduced or deferred repayments, or a change to the loan terms. These options can increase the total interest or extend the loan, so understand the long-term cost—but early assistance may prevent a temporary setback becoming a crisis. If a hardship complaint cannot be resolved with the lender, the Australian Financial Complaints Authority provides an independent complaints process.

A simple mortgage action plan

This week, take these five steps:

Record the basics. Your loan balance, interest rate, remaining term, minimum repayment and annual fees.
Confirm your offset is working. Check it is correctly linked and actually reducing the interest charged.
Compare. Weigh your rate and features against several alternatives, including the comparison rate and switching costs.
Automate one change. An affordable extra repayment, or a genuine fortnightly schedule.
Test and review. Model the result with the Moneysmart mortgage calculator, then revisit the plan whenever your income, expenses or interest rate changes.

There is no single trick that removes a decade from every mortgage. The strongest results usually come from combining several sensible habits: a competitive rate, money held in a cost-effective offset, regular extra repayments, occasional lump sums, and a loan term that is not quietly extended during refinancing.

The goal is not to make household finances painfully restrictive. It is to ensure that more of each available dollar builds ownership of your home instead of being lost to avoidable interest.

General information only. This article does not take account of your objectives, financial situation or needs and is not financial, credit, legal or tax advice. Consider obtaining advice from an appropriately qualified professional before changing a loan or acting on tax-related strategies.