Paying off your home loan ahead of schedule is one of the most powerful financial moves you can make. Even modest changes to how you manage your mortgage can shave years off your loan term and save you a significant amount in interest. With the current RBA cash rate at 3.85%, there's no better time to review your strategy and take control of your biggest debt.
In this guide, we break down ten proven strategies to help you pay off your mortgage faster - from simple tweaks like rounding up repayments to bigger moves like refinancing to a lower rate. Every tip is actionable, and you don't need to use all ten - even applying two or three can make a meaningful difference.
1. Switch to Fortnightly Repayments
This is one of the simplest and most effective ways to accelerate your home loan payoff. Instead of making one monthly repayment, you split your monthly amount in half and pay that amount every two weeks.
The key insight is mathematical: there are 26 fortnights in a year, which means you end up making the equivalent of 13 monthly repayments instead of 12. That extra month's worth of repayment goes directly towards reducing your principal - and because your loan balance drops faster, you pay less interest over the life of the loan.
Most lenders allow you to switch to fortnightly repayments at no cost. Contact your lender or check your online banking portal to make the change.
Why it works
- 26 fortnightly payments = 13 monthly equivalents per year
- The extra repayment reduces your principal faster
- Less principal means less interest accrued each period
- Over a standard loan term, this strategy alone can typically reduce your loan term by several years
2. Make Extra Repayments Whenever You Can
Extra repayments - on top of your minimum required amount - go directly towards reducing your loan principal. Because home loan interest is calculated on the outstanding balance, every dollar of extra repayment reduces the interest you pay going forward.
The power of extra repayments comes from compounding in reverse: the earlier and more frequently you make them, the greater the long-term impact. Even small, regular additional amounts can accumulate significantly over the life of a loan.
Before you start, check whether your loan allows unlimited extra repayments without penalty. Most variable-rate loans do, but some fixed-rate loans may cap the amount you can pay ahead or charge break costs. Always confirm with your lender.
Tip: Use ASIC's mortgage calculator to model how extra repayments could affect your specific loan.
3. Use an Offset Account Effectively
An offset account is a transaction or savings account linked to your home loan. The balance in your offset account is "offset" against your outstanding loan balance when interest is calculated. For example, if your loan balance is a certain amount and you hold funds in your offset account, you only pay interest on the difference.
To get the most out of an offset account:
- Centralise your savings. Keep your emergency fund, everyday savings, and any spare cash in your offset account rather than a separate savings account.
- Deposit your salary directly. The more days your pay sits in the offset before you spend it, the more interest you save.
- Avoid leaving the offset empty. Even a modest ongoing balance reduces the interest calculated each day.
Not all home loans come with a full offset account - some offer partial offsets or none at all. If your loan doesn't include one, it may be worth considering a refinance to a product that does. For a deeper comparison of offset accounts versus redraw facilities, read our offset vs redraw guide.
4. Refinance to a Lower Interest Rate
Refinancing your home loan to a lower rate is one of the highest-impact moves you can make. Even a small reduction in your interest rate can substantially reduce the total interest paid over the life of your loan.
The best variable home loan rates currently start from 5.43% p.a., which may be significantly lower than what you're paying on an older loan. If you haven't reviewed your rate in the past year or two, there's a good chance you could benefit from switching.
When considering refinancing, factor in:
- Discharge and application fees - some lenders charge fees to exit or set up a loan
- Comparison rates - these include fees and give a truer picture of cost
- Features you need - ensure the new loan still offers offset, redraw, or extra repayment flexibility
- Cashback offers - some lenders offer cashback to attract refinancers, but always compare the ongoing rate, not just the incentive
Use our home loans comparison page to see the latest rates side by side, or read our detailed refinancing guide for a step-by-step walkthrough.
Compare Current Variable Home Loan Rates
| Lender | Product | Rate | Comparison | Features |
|---|---|---|---|---|
 Bank of China | Discount Home Loan (With Principal And Interest Repayment) (Variable) | 5.43% | 5.64% | RedrawExtra |
| Bank of China | Discount Plus Home Loan (With Principal And Interest Repayment) (Variable) | 5.43% | 5.82% | OffsetRedrawExtra |
| Up Home Loan (Variable) | 5.45% | 5.45% | OffsetRedrawExtra | |
| Home Value Loan (Variable) | 5.49% | 5.50% | RedrawExtra | |
| Home Value Loan (Variable) | 5.54% | 5.55% | RedrawExtra | |
 ME Bank | Me Bank Econome Home Loan (Variable) | 5.58% | 5.60% | RedrawExtra |
5. Maintain Your Repayments After a Rate Cut
When the RBA lowers the cash rate and your lender passes on a reduction, your minimum repayment amount typically decreases. It's tempting to enjoy the lower repayment - but keeping your repayment at the pre-cut level is a painless way to accelerate your mortgage payoff.
You're already accustomed to the higher amount, so your day-to-day cash flow won't feel any different. The difference between your old and new minimum goes entirely towards reducing the principal.
This works in any rate environment. If rates have been cut since you took out your loan, check whether your repayments have been reduced automatically and consider resetting them to the original amount - or higher.
6. Round Up Your Repayments
Rounding your repayments up to the nearest hundred or even the nearest fifty is a low-effort way to chip away at your principal faster. The additional amount per repayment is small, but it compounds significantly over years.
For instance, if your minimum monthly repayment is an irregular figure, rounding it up means every repayment makes a slightly larger dent in your principal. Over a full loan term, these small increments can reduce your loan by months or even years.
Most lenders allow you to set a fixed repayment amount above the minimum via internet banking. Set it once and let it work in the background.
7. Use Windfalls Wisely
Tax refunds, work bonuses, inheritance payments, or any unexpected cash injection can have an outsized impact when directed towards your home loan. A lump sum paid directly onto your principal immediately reduces your outstanding balance, which means you pay less interest from that point forward.
You don't need to put every windfall onto your mortgage - maintaining an emergency fund is equally important. But allocating a portion of unexpected income to your home loan is one of the fastest ways to bring your payoff date forward.
Ideas for windfall sources
- Annual tax refund
- Work performance bonuses
- Gifts or inheritance
- Sale of unused assets (car, furniture, electronics)
- Side income or freelance earnings
8. Consider a Shorter Loan Term
Most Australian home loans default to a 25 or 30-year term. If you can comfortably afford higher repayments, choosing a shorter term - such as 20 or even 15 years - will dramatically reduce the total interest you pay.
A shorter term means higher regular repayments, so it's important to ensure you won't be stretched too thin. Use a mortgage calculator to model how different terms affect your repayments before making the switch.
If you're refinancing, it's an ideal time to reassess your term length. For example, if you've already been repaying for several years, you could refinance to a new loan with a shorter remaining term rather than resetting to another 30 years.
Important: Shortening your loan term increases your minimum repayment obligations. Always ensure you can meet the higher repayments comfortably, with a buffer for unexpected expenses or rate rises.
9. Avoid Unnecessary Redraws
A redraw facility allows you to withdraw extra repayments you've already made on your loan. While this is a useful safety net, treating your redraw as a spending account undermines the benefit of those extra repayments.
Every time you redraw funds, your principal balance increases again - and so does the interest charged on it. The compounding benefit of your extra repayments is lost.
To stay disciplined:
- Reserve redraws for genuine emergencies or planned major expenses - not everyday spending
- Keep a separate emergency fund in your offset account rather than relying on redraw
- Set a personal rule - for example, only redraw if the expense exceeds a threshold you've set for yourself
Some lenders also impose minimum redraw amounts or processing fees, which can further erode the value of frequent withdrawals.
10. Review Your Loan Annually
The Australian home loan market is highly competitive, with lenders regularly adjusting rates, fees, and features to attract borrowers. If you set and forget your mortgage, you may end up paying more than you need to.
Make it a habit to review your home loan at least once a year. During your review:
- Check your current rate against what's available in the market. Use our home loan comparison tool to see the latest rates.
- Call your lender and ask for a rate match or discount. Many lenders will negotiate to keep your business - especially if you can cite a competitive offer.
- Assess your features - are you paying for features you don't use, like a package fee or a credit card bundle?
- Consider switching if your lender won't budge and you can save meaningfully elsewhere. Refinancing has become faster and easier in recent years.
The cost of inertia on a home loan is real. Even a small rate difference over a long loan term translates to a significant amount of money. Stay proactive.
Putting It All Together
You don't need to implement all ten strategies at once. Start with the ones that require the least effort - switching to fortnightly repayments, rounding up, and directing your savings into an offset account - and build from there.
The most impactful single move for many borrowers is refinancing to a lower rate. If you haven't compared rates recently, it's worth starting there. The best variable rates currently begin from 5.43% p.a., and the current RBA cash rate sits at 3.85%.
For a deeper understanding of how interest rates affect your repayments, explore our interest rate forecast guide. And if you're weighing up whether to use a broker or go direct, our mortgage broker vs bank guide can help clarify your options.
Remember: every extra dollar you put towards your home loan today reduces the interest you'll pay tomorrow. Small, consistent actions create enormous results over time.
Frequently Asked Questions
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