Owning a home is a major achievement—but what if you could fast-track your way to financial freedom by paying off your mortgage early? While a 25- or 30-year home loan might seem like a lifelong commitment, it doesn’t have to be. With the right planning and discipline, you can cut years off your loan term and save thousands in interest. In this guide, we’ll walk you through practical strategies to help you pay off your mortgage faster and enjoy the security of a debt-free future.
1. Make Extra Payments Whenever You Can
Small additional payments can make a big impact over time. Whether it’s $50 or $500, every extra dollar reduces your principal and the amount of interest you pay.
Here’s how to get started:
- Round up your payments: If your monthly repayment is $1,275, consider paying $1,300 or even $1,500 if your budget allows.
- Add lump sums: Tax returns, work bonuses, or cash gifts can be applied directly to your principal.
- Make fortnightly payments: Instead of paying monthly, make half your monthly payment every two weeks. You’ll end up making the equivalent of one extra payment per year—without feeling the pinch.
2. Refinance to a Shorter Loan Term
Switching to a 15-year mortgage could save you tens of thousands in interest over the life of your loan. Yes, your monthly payments may be higher, but the interest savings and quicker path to ownership are compelling.
Before refinancing, consider:
- The interest rate you’re currently on versus what’s available
- Refinancing fees and closing costs
- Your ability to comfortably handle the higher repayments
3. Automate Your Extra Contributions
Consistency is key. Automating your extra payments ensures that you stay on track without needing to think about it each month.
Ways to automate:
- Set up recurring transfers from your bank account
- Ask your lender to apply extra payments directly to the principal
- Align payment dates with your pay cycle for better cash flow management
4. Prioritise Principal-Only Payments
When making extra repayments, always specify that the amount should go toward the principal only—not future interest or prepayments. Reducing your principal helps lower your interest charges going forward.
Check with your lender to ensure they allow principal-only payments without penalties. Some may require a note or specific instructions when submitting additional funds.
5. Use Windfalls Wisely
Instead of spending your tax return, bonus, or inheritance on a splurge, consider applying it to your mortgage. These one-off lump sum payments can dramatically reduce your loan term and save you thousands in interest.
Example: A $5,000 lump sum paid in your third year could reduce your loan term by several months—and the savings in interest could be even greater.
6. Rework Your Budget to Find More Savings
The more you can save each month, the more you can redirect toward your mortgage.
Ways to trim expenses or boost income:
- Cancel unused subscriptions and renegotiate service plans
- Cut back on discretionary spending like dining out or impulse purchases
- Take on a side hustle or freelance work
- Redirect monthly savings (e.g. after paying off a car loan) into your mortgage
Every dollar you save today is one less dollar of interest you’ll pay tomorrow.
7. Make Bi-Weekly Payments
Instead of one monthly repayment, try splitting your payment in two and paying fortnightly. Because there are 26 fortnights in a year, you end up making one extra monthly payment annually.
Benefits:
- Speeds up your repayment schedule
- Helps reduce the total interest paid
- Fits naturally into many people’s pay cycle
8. Reassess Your Mortgage Annually
Financial circumstances change, so it’s a good idea to review your loan terms once a year. You may be eligible for a better rate or more flexible loan features.
Consider:
- Refinancing if interest rates have dropped
- Changing your repayment type from interest-only to principal-and-interest
- Negotiating with your lender for a lower rate
Being proactive helps you stay ahead of the curve and maximise every opportunity to save.
Final Thoughts: Freedom Starts with a Plan
Paying off your mortgage early doesn’t require radical changes—it just takes consistency, discipline, and a clear strategy. Whether you’re adding an extra $100 a month or putting your tax refund toward your loan, every contribution helps you move closer to full homeownership.
Be sure to:
- Understand your loan structure
- Check with your lender about prepayment terms
- Review your progress regularly
The sooner you’re mortgage-free, the sooner you can redirect your income toward other goals—like investing, travelling, or retiring early.