How to Pay Off Your Mortgage Faster in Australia (2026)
The average Australian home loan has a 30-year term — but very few Australians actually take 30 years to pay it off. With the right strategies, you can cut years (and tens of thousands of dollars) from your mortgage, often without dramatically changing your lifestyle.
Here are the most effective strategies, with realistic numbers.
1. Make Extra Repayments
The most direct way to pay off your mortgage faster is to pay more than the minimum required repayment whenever possible.
On a variable rate loan, most lenders allow unlimited extra repayments with no penalty. On a fixed rate loan, extra repayments are often capped (typically $10,000 per year) — check your loan terms.
Example — $600,000 loan at 6%, 30-year term:
| Extra repayment | Interest saved | Years saved |
|---|---|---|
| $200/month | ~$78,000 | ~3.5 years |
| $500/month | ~$150,000 | ~7 years |
| $1,000/month | ~$214,000 | ~11 years |
Even small amounts add up dramatically over time due to compounding interest savings.
→ See Extra Repayments — How Much Do They Save?
2. Switch to Fortnightly Repayments
If your lender calculates repayments on a daily or monthly basis, switching from monthly to fortnightly payments can save interest and cut years from your loan — simply by making the equivalent of one extra monthly payment per year.
How it works:
- Monthly payment: 12 payments per year
- True fortnightly payment: 26 payments per year = equivalent of 13 monthly payments per year
That one extra effective monthly repayment per year reduces principal faster, cutting interest at each step.
Typical savings on a $600,000 loan at 6%: approximately 3–4 years off the loan term.
→ See Fortnightly vs Monthly Mortgage Repayments
3. Use an Offset Account
A 100% offset account is a transaction or savings account linked to your mortgage. The balance in the offset account reduces the loan principal that interest is calculated on — dollar for dollar.
Example:
- Loan balance: $500,000
- Offset account balance: $50,000
- Interest is charged on: $450,000
If you keep your salary, emergency fund and general savings in an offset account instead of a standard bank account, you can save significant interest without “locking up” the money — it remains fully accessible.
→ See How Offset Accounts Save You Money
4. Apply Windfalls Directly to the Loan
A tax refund, work bonus, inheritance, sale of assets, or any other lump sum applied directly to your mortgage principal can save years of interest.
Example — $10,000 lump sum on a $600,000 loan at 6%, 25 years remaining:
- Interest saved: approximately $16,000
- Time saved: approximately 9 months
The earlier in the loan term you make a lump sum payment, the greater the savings — because interest compounds on the full remaining balance.
→ See Paying a Lump Sum Off Your Mortgage
5. Keep Repayments at the Old Level After a Rate Drop
When the RBA cuts the cash rate and your variable rate falls, many borrowers enjoy the reduction as lower minimum repayments. A smarter strategy: keep your repayment at the same level and let the extra amount go to principal.
Example:
- Previous rate: 6.5%, monthly repayment on $600k: ~$3,792
- New rate: 6.0%, minimum repayment: ~$3,597
- Continuing to pay $3,792: $195/month extra → saves ~$65,000 in interest over the loan life
6. Round Up Your Repayments
Small rounding-up is a low-friction habit with meaningful long-term effect. Rounding $3,450 to $3,500, or $3,750 to $4,000, costs little to budget but consistently reduces principal faster.
7. Consider a Split Loan to Balance Flexibility and Strategy
A split loan divides your mortgage into a fixed portion (rate certainty) and a variable portion (flexibility for extra repayments and offset). This lets you make unlimited extra repayments on the variable portion while protecting a portion of your rate.
→ See Split Loan Strategy
8. Refinance to a Better Rate (and Keep Repayments the Same)
If you can refinance to a lower rate — and maintain the same repayment amount — more of each payment goes to principal and you pay off the loan faster.
Important: Only consider refinancing if the interest savings outweigh the costs (discharge fee, new loan establishment fee, possible break cost on fixed rate). A mortgage broker can calculate this for your specific situation.
What Doesn’t Actually Help
Interest-only loans: While they lower your minimum repayments, interest-only loans mean you are paying nothing off the principal — you are not getting ahead. After the interest-only period ends, your principal repayment period is compressed, leading to higher required repayments.
Extending the loan term when refinancing: Refinancing from, say, 22 years remaining to a new 30-year term reduces minimum repayments but adds 8 years to the loan — costing more in total interest even if the rate is lower.
Frequently Asked Questions
Can I make extra repayments on a fixed rate loan?
Most lenders allow limited extra repayments on fixed rate loans — typically up to $10,000 per year. Exceeding this cap may trigger break costs. Check your specific loan terms.
Is an offset account better than extra repayments?
It depends on your flexibility needs. Extra repayments permanently reduce the loan balance (you cannot take them back on most loans without redraw, which may have restrictions). Offset account balances remain accessible. If you want liquidity, offset wins. See Offset Account vs Extra Repayments.
How much can I realistically save?
On a $700,000 loan at 6%, paying an extra $500/month saves approximately $175,000 in interest and about 8 years off a 30-year term. The exact savings depend on your rate, balance and how consistently you make extra repayments.
Related Guides
- Extra Repayments — How Much Do They Save?
- How Offset Accounts Save You Money
- Fortnightly vs Monthly Repayments
- Should I Pay Off My Mortgage or Invest?
- Mortgage Repayment Hub
This article provides general information about mortgage repayment strategies in Australia. Worked examples are estimates only and assume a constant interest rate. Actual savings will vary. For advice tailored to your situation, speak with a licensed mortgage broker or financial adviser. Find one through MoneySmart.