How to Pay Off Your Home Loan Faster Without Breaking the Bank
Do you want to learn how to pay off your home loan faster? If you answered yes, you’re not alone. Lots of homeowners with a mortgage in Australia, and even worldwide for that matter, are constantly trying to find out if there are ways to pay off a home loan faster so they can get out of debt sooner. Is it doable? Are there truly ways to get out of debt in a shorter period of time?
“How can I pay down my mortgage faster?” It’s a question countless homeowners are asking in 2025. As we ride out the current cost of living crisis, many Aussies are focused on reducing long-term debt to ease future financial stress. One of the best ways to do this is to pay off your mortgage as soon as possible. So, we’ve provided some practical and manageable tips on how to pay off your home loan faster without breaking the bank.
Why Pay Off Your Home Loan Faster?
While it’s easy to have a “set and forget” mindset when it comes to your home loan, there are some massive benefits to paying off your mortgage faster. These include:
- Saving Money: The faster you reduce your mortgage, the less interest you’ll pay.
- Building Equity: With sufficient equity you could renovate, upgrade to your dream home or buy an investment property.
- Gaining Financial Freedom: Imagine how much extra money you’d have each month if you didn’t have to pay your mortgage!
Can HECS Debt Affect Your Home Loan Eligibility?
Your HECS debt repayment won’t affect your credit score, but lenders will include the total value when calculating your financial commitments. Since HECS repayments are automatically deducted from your salary once you meet the minimum threshold, lenders will count this as a regular outgoing expense.
How does this affect your borrowing capacity? In simple terms, the higher your HECS bill, the less surplus income you have available to pay a mortgage, so the lower your potential borrowing capacity will be.
How Can I Pay Down My Mortgage Faster?
Paying off a home loan faster can seem like an overwhelming challenge. Many people assume it requires strict discipline and the loss of all your favourite indulgences…but that’s not the case! There are simple and practical steps you can take that will have minimal impact on your weekly budget but could shave years off the life of your loan.
How to Pay Off Your Home Loan Faster: 5 Tips to Try
1. Make Extra Repayments
Even small amounts can go a long way. For example, imagine you have a $500,000 home loan with a 30-year term and a 6.2% interest rate. By contributing an extra $50 each week, you’d pay off your loan almost 5 years earlier and save over $116,000 on interest!
2. Use an Offset Account
An offset account is a transaction account linked to your home loan. You use it like a traditional bank account but with one major difference – any money in the account is used to “offset” the balance of the loan when the lender calculates interest. With an offset account, your monthly repayments could stay the same, but you’d be paying more off the principal and less on interest.
3. Consider Refinancing
Refinancing isn’t always a magic bullet that will save you thousands. But if you’ve been with your current lender for quite some time and you’re seeking more flexibility (plus a better deal) then it could be worth a try. Talk to a mortgage broker about whether refinancing could help you pay off a home loan faster.
4. Redirect Savings
In an unstable economic climate, it makes sense to have savings. But that money you’ve set aside for a rainy day could be put to better use. With a redraw facility, you could use your savings to pay down your home loan balance in the short term. Then, if you ever need those funds in the future, you simply “redraw” them for your personal use.
5. Make the Most of Lump Sum Payments
Your annual tax return, an end-of-year bonus, a cash birthday gift – they might not seem like much, but these little lump sums (which add up over time) can be one of the easiest and fastest ways to pay down a mortgage.
What’s the Fastest Way to Pay Down Your Mortgage?
The fastest way to pay off a home loan is to combine as many of the above suggestions as you can. For example, you may refinance your mortgage to a loan that has an offset or a redraw account. Then you can start making additional payments once a month and use your annual tax return to make a lump sum payment. The key is to be consistent and keep monitoring your progress.
How to Pay Off Your Home Loan Faster with NBHL
It is possible to pay off your home loan faster and without having to sacrifice the things you love. Remember, even small changes can have a big impact over time. All you need to do is get the right advice, make a plan and do your best to stick to it.
For expert advice on how to pay off your mortgage faster, contact the team at North Brisbane Home Loans today. We can evaluate your current situation, discuss your long-term financial goals and recommend a plan of action that’s tailored to your needs.
Patrick Cranshaw, a Certified Mortgage Professional for over 21 years, founded North Brisbane Home Loans in 2002. His career began with ANZ Bank in New Zealand, where he progressed over 16 years to a Business Banking role in Virginia. After moving to Brisbane in 2000, Patrick led the QLD market for a home loan agency, helped set up the REMAX Real Estate Finance division, and practiced as a broker.
