# How you could pay off your mortgage faster

## Use these tips to save serious money on your home loan.

There are so many simple ways to quickly cut down how much you owe on your mortgage beyond just making extra repayments. There are multiple features already included in your home loan that can assist you in this. If your home loan lacks these features, you may be able to refinance.

### 1. Increase your repayment frequency

#### Make fortnightly or 'bi-monthly' payments

You really can save tens of thousands of dollars in interest charges and reduce your loan term by making fortnightly rather than the standard monthly repayments.

Here's how it works. Let's assume your monthly repayment is \$1,000. Don't do any fancy calculations here. Just divide your monthly payment amount by 2 and pay this new amount on the same day every fortnight. You'll be paying \$500 per fortnight.

Now, if you were to stick to your monthly payments of \$1,000 you would end up paying \$12,000 by the end of that year (12 months x \$1,000 = \$12,000). However, if you make fortnightly payments of half your monthly amount, you end up making exactly one additional payment per year (26 fortnights x \$500 = \$13,000).

This additional payment helps to reduce your balance faster. You could cut your loan term by as much as six years by doing this. Use our calculator below to work out the effect fortnightly or bi-monthly repayments might have on your home loan.

Weekly payments don't accelerate the effect of bi-monthly payments, but they still put you ahead due to the way interest is charged.

Let's assume your monthly payments are still \$1,000. Divide this figure by 4 to get \$250 per week. Pay this amount of money on the same day every week. If you pay \$1,000 per month, you'll pay \$12,000 by the end of the year (12 months x \$1,000 = \$12,000). If you pay \$250 per week, you'll pay \$13,000 by the end of the year (52 weeks x \$250 = \$13,000).

### 2. Make your interest calculations work for you

#### Take advantage of interest calculations

The interest on your mortgage is calculated on the outstanding balance every day. This means you can reduce the amount of interest you pay overall by increasing how often you make a payment on your mortgage. Let's take a look at an example. In this scenario, you owe \$300,000 and you're paying 6.06% interest. Your monthly repayments are \$1,810.24.

Payment NumberLoan AmountPaymentInterest PaidBalance
1\$300,000\$1810.24\$1515.00\$299,704.76

After just one month, you've paid \$1810.24 on your repayment and you've paid \$1515.00 in interest charges.

##### Fortnightly

Let's see what happens if you pay exactly the same amount of money over the same four weeks, but you pay it more frequently. In this example we'll make exactly two fortnightly payments of \$905.12 – this is exactly half of the previous monthly payment.

Payment NumberLoan AmountPaymentInterest PaidBalance
1\$300,000\$905.12\$699.23\$299,794.11
2\$299,794.11\$905.12\$698.75\$299,587.74
(totals)(\$1810.24)(\$1397.98)

By paying fortnightly, you only paid \$1397.98 in interest instead of \$1515.00. This is \$117.02 less interest coming out of your hard earned cash. On top of this, your balance is down to \$299,587.74. Of course this is \$117.02 less than the previous example, as that interest saving is now paid off your mortgage balance instead.

##### Weekly

Let's look at how paying the exact same amount of money on a weekly basis affects your mortgage balance. Your monthly payment is still \$1810.24. Divide this number by four to get \$452.56 and pay this amount weekly.

Payment NumberLoan AmountPaymentInterest PaidBalance
1\$300,000\$452.56\$349.62\$299,897.05
2\$299,897.05\$452.56\$349.50\$299,793.99
3\$299,793.99\$452.56\$349.38\$299,690.80
4\$299,690.80\$452.56\$349.26\$299,587.49
(totals)(\$1810.24)(\$1397.76)

Once again, you've still paid exactly the same monthly payment amount of \$1810.24 over those four weeks, so you haven't made any extra payments yet; however, the amount of interest you've paid is \$1397.76 instead of \$1515. This \$117.24 you saved gets paid off your mortgage balance instead. This figure is only marginally higher than the amount you saved by paying fortnightly. However, this example only runs over one month. Over the term of a 30 year loan, those small savings really do add up to a lot of money.

### 3. Rounding up: small change counts

The vast majority of banks will allow you to nominate the amount you want to use to make each repayment. This means you don't have to pay just the minimum amount. Of course, if you don't want to stretch your budget too far you can simply round up the payment you make to the nearest \$5 or \$10. This makes it easier to remember and it counts as making an extra payment.

If you have a mortgage of \$300,000 at 6.06% your monthly payment is \$1810.24. Round this figure up to an even \$1820 each month. It's only \$9.76 per month extra so it won't break your budget. Yet, you'll shave 6 months off the end of your mortgage term and save \$6,293.33 in interest charges. Small change has a big impact. Imagine how much more you could save and how much faster you'd repay your mortgage if you could round up that number even higher.

### 4. Use the features

#### Offset accounts

Any opportunity you have to reduce the amount of interest you're charged helps you to pay off your mortgage faster. If your home loan has the capacity to link a 100% offset account to it, it can help you pay your home loan off faster. Every dollar you leave in your offset savings account actively reduces the amount of interest you pay on your mortgage. For example, if your mortgage is \$300,000 and you have \$10,000 in your offset account you'll only pay interest on \$290,000.

#### Redraw facilities

Another popular modern home loan feature is redraw, where you can withdraw money from your home loan if you have made additional repayments. This gives you the freedom to make additional repayments, without having to worry about losing access to those funds in an emergency.

You will need to make sure that your mortgage repayment plan allows additional repayments because if it is not an included feature, you will usually pay high fees each time you make an additional repayment or redraw.

### 5. Review your own loan

No matter which bank your home loan is with right now, you're almost certain to find a better deal out there. Take some time to shop around and compare what other lenders are charging for their home loans.

When you've done a bit of homework, call your bank and ask them if they're able to offer you a better rate than the one you're already paying. Let them know you've shopped around and you're aware of what else is available. Then see if they're willing to negotiate for a better rate.

Even a small reduction in interest rate can save you money. For example:

Interest Rate Reduction
 Loan Amount Original Interest Rate & Payment 0.1% Discount & Payment Interest Saved over Loan Term \$250,000 6.26% - \$1,540.92 6.16% - \$1,524.69 \$5,842.80 \$300,000 6.26% - \$1,849.10 6.16% - \$1,829.63 \$7,011.36 \$350,000 6.26% - \$2,157.29 6.16% - \$2,134.57 \$8,179.92

As you can see from the examples above, even a small reduction in interest rate of just 0.1% can reduce your monthly repayment a little. However, it's over the entire loan term that the interest savings become apparent.

### 6. Switch loan types

Most banks and lenders offer more than one type of home loan product. Some will carry higher interest rates than others. Some will have package discounts available on them. Others will have additional features and products that you might be able to take advantage of.

For example: You should find that a Basic Variable home loan will offer a much lower interest rate than a Standard Variable home loan. However, there are significant differences between the features and flexibility of these loans, so be sure you're comparing the type of loan you really need. If you don't use the features attached to your current home loan now to your advantage, you might find that a Basic Variable loan will be fine for you. This can help to reduce your interest rate, reduce your monthly repayment and save you thousands over the loan term.

#### The drawbacks of mortgage overpayments

Whether you can repay your mortgage early will also depend on whether your lender charges early repayment and overpayment fees. If you truly want to benefit from mortgage overpayments to get out of debt sooner, make sure you choose a home loan which allows unlimited additional repayments for free.

If you do have a home loan which charges fees for additional repayments, consider saving up any additional repayments and make them as one lump sum amount to lessen the fees applied. If your loan does allow unlimited repayments without a fee check to see if this feature comes with a higher interest rate. You may be smarter to look at shopping around for another loan.

You may also want to think about applying any financial windfalls to your home loan. If you get bonuses at work, you work on a commission basis, you get a generous tax bonus or gift of cash on your birthday, all of these can go towards repaying your home loan debt sooner.

### Compare a selection of home loans

Rates last updated May 20th, 2019
\$
Loan purpose
Offset account
Loan type
Repayment type
Your filter criteria do not match any product
Name Product Interest Rate (p.a.) Comp Rate^ (p.a.) Application Fee Ongoing Fees Max LVR Monthly Payment Short Description
3.59%
3.59%
\$0
\$0 p.a.
80%
Enjoy flexible repayments, a redraw facility and the ability to split your loan. Plus, pay no application or ongoing fees.
3.59%
4.54%
\$300
\$10 monthly (\$120 p.a.)
90%
Home buyers can lock in a very competitive fixed interest rate for 2 years.
3.79%
3.82%
\$445
\$0 p.a.
90%
NSW and ACT customers only. Get a special discount for a limited time when you open an IMB Transaction Account.
3.48%
3.63%
\$600
\$10 monthly (\$120 p.a.)
80%
A competitive variable rate for home buyers with a 20% deposit. This product has a 100% offset account.
3.59%
3.62%
\$500
\$0 p.a.
95%
This mortgage combines a very sharp interest rate with a 100% offset account and it's available with a 5% deposit.
3.74%
3.78%
\$0
\$10 monthly (\$120 p.a.)
80%
Get a competitive variable rate and a 100% offset account.
3.49%
4.67%
\$0
\$395 p.a.
90%
Loans over \$150000 get a discount off an already low fixed rate. Available for NSW, QLD and ACT residents only.
3.79%
3.79%
\$0
\$0 p.a.
80%
Access an offset account and pay no application or ongoing fees on this special variable rate for owner-occupiers.
3.59%
3.66%
\$0
\$0 p.a.
70%
Get a low interest rate and a mortgage with flexible, basic features. No application or ongoing fees. Requires a 30% deposit.
3.59%
4.62%
\$445
\$6 monthly (\$72 p.a.)
90%
NSW and ACT customers only. 2 years fixed interest terms and free access to redraw facility online.
3.58%
4.26%
\$0
\$395 p.a.
80%
Get a low 3 year fixed rate with a 100% offset account and package discounts.
3.59%
3.55%
\$0
\$0 p.a.
80%
Low variable rate mortgage for owner occupiers looking to switch. Refinancers only.
3.59%
5.17%
\$595
\$20 monthly (\$240 p.a.)
95%
Fix your interest rate for 2 years and lock in your repayments. Available with a 5% deposit.
3.82%
3.83%
\$0
\$0 p.a.
110%
Pay no deposit or LMI and get a discounted rate with this family pledge loan. Requires a family member to act as guarantor. NSW, Qld and ACT only.
3.69%
4.21%
\$0
\$10 monthly (\$120 p.a.)
90%
Get a low discounted rate for 2 years plus a 100% offset account. And you can get the loan with a 10% deposit.
3.74%
3.81%
\$0
\$10 monthly (\$120 p.a.)
95%
Lock in a competitive rate for three years while you pay off your home. 100% offset account attached.
3.74%
4.31%
\$0
\$395 p.a.
80%
Lock in a competitive rate for owner occupiers for two years. Extra repayments up to \$30,000 over the life of the fixed period can be made.
4.09%
4.41%
\$0
\$299 p.a.
80%
Investors can enjoy a 100% offset account, a redraw facility and flexible repayments.
3.97%
3.99%
\$0
\$0 p.a.
80%
This variable rate loan keeps the features simple and fees low. This loan is offered by a 100% online lender.
3.99%
3.95%
\$0
\$0 p.a.
80%
A competitive variable mortgage for investors looking to refinance. Principal and interest repayments. Refinancers only.
3.99%
4.97%
\$445
\$6 monthly (\$72 p.a.)
90%
NSW and ACT customers only. A 3 years fixed rate investor which allows extra repayments to be made.
3.74%
3.81%
\$0
\$10 monthly (\$120 p.a.)
90%
Fix to a low interest rate for two years while paying off your home and taking advantage of a 100% offset account.
3.77%
3.81%
\$0
\$0 p.a.
95%
A simplified mortgage with a low interest rate and a redraw facility. Approval fee waived for a limited time.
3.44%
3.59%
\$600
\$10 monthly (\$120 p.a.)
70%
A very low variable interest rate for home buyers with a 30% deposit. This product has a 100% offset account.
3.99%
3.99%
\$0
\$0 p.a.
80%
Get a discounted, low-fee investor loan from a convenient online lender. 20% deposit required.
3.64%
4.63%
\$300
\$10 monthly (\$120 p.a.)
90%
Low fixed rate loan for home buyers. Available with a 10% deposit. 100% offset account attached.
3.79%
3.79%
\$0
\$0 p.a.
95%
Competitive, flexible rate mortgage with simple features and low fees. Low deposit option available.
3.69%
3.69%
\$0
\$0 p.a.
95%
A low deposit mortgage with a competitive rate and plenty of flexibility. QLD residents only. Eligible borrowers can get a 15% discount on home and contents insurance for the life of their loan.
3.49%
3.85%
\$600
\$10 monthly (\$120 p.a.)
70%
A low fixed rate mortgage for borrowers with a 30% deposit. Comes with a 100% offset account.
3.77%
3.82%
\$600
\$0 p.a.
80%
Family guarantee option available. Enjoy flexible repayments and a low minimum loan amount.
3.69%
3.83%
\$0
\$10 monthly (\$120 p.a.)
80%
Earn Velocity Frequent Flyer Points on your mortgage (subject to eligibility requirements). Plus, access a 100% offset account to save on interest.
3.69%
4.09%
\$0
\$395 p.a.
95%
Get interest rate discounts and waived fees on this package loan with a 100% offset account. \$500 cashback offer for first homebuyers borrowing over 80% and paying LMI.
3.79%
4.18%
\$0
\$349 p.a.
90%
Get a sharp rate plus package discounts and a 100% offset account.
3.79%
4.22%
\$0
\$395 p.a.
80%
Unlock a range of savings with this competitive package home loan offer. Offset account and redraw facility included.
3.97%
4.28%
\$0
\$299 p.a.
80%
A competitive package rate for loans above \$150,000. Optional 100% offset account.
3.59%
4.53%
\$445
\$6 monthly (\$72 p.a.)
90%
NSW and ACT customers only. 3 years fixed interest terms and free access to redraw facility online.
3.69%
4.08%
\$0
\$395 p.a.
90%
A high maximum LVR home loan with redraw facility and additional payments. Get this mortgage with a 10% deposit.
4.09%
3.74%
\$0
\$0 p.a.
80%
Variable interest only mortgage for owner occupied refinancers. Refinancers only.
3.69%
3.69%
\$0
\$0 p.a.
70%
A simple mortgage with no application or ongoing fees that has extra repayments plus split and redraw options. Requires a 30% deposit.
3.85%
4.79%
\$0
\$0 p.a.
90%
A package home loan with a sharp fixed rate and a 10% deposit option for low deposit borrowers.
3.59%
3.97%
\$395
\$0 p.a.
80%
A competitive fixed interest rate product with no ongoing bank fees.
3.79%
3.79%
\$0
\$0 p.a.
80%
Low fee loan with extra repayments. Pay no application and ongoing fees and take advantage of split and redraw options.
3.69%
3.90%
\$0
\$10 monthly (\$120 p.a.)
90%
Get Velocity Frequent Flyer Points at settlement, monthly and every three years, plus the option to make up to \$10,000 a year in extra repayments.
3.85%
4.18%
\$500
\$0 p.a.
95%
Apply for Easy Street fixed rate home loans and get a competitive loan with a fixed interest rate.
4.19%
4.22%
\$0
\$0 p.a.
90%
For a limited time, pay no application or settlement fees. You can also take advantage of a free redraw facility.
3.78%
3.92%
\$0
\$10 monthly (\$120 p.a.)
80%
Borrow up to \$500000 and earn Velocity Frequent Flyer Points (terms and conditions apply).
3.69%
3.94%
\$0
\$248 p.a.
70%
Borrowers with a 30% deposit can get this competitive rate. Cut down on interest costs with a 100% offset account.
3.69%
3.86%
\$0
\$0 p.a.
95%
This high LVR fixed rate loan allows you to borrow up to 95% of the value of the property you're buying. Approval fee waived for a limited time.
3.74%
4.13%
\$0
\$349 p.a.
90%
Package your loan with other AMP products and save on rates and fees.
3.82%
3.83%
\$0
\$0 p.a.
90%
New customers can get a discounted variable rate and a fee-free redraw facility. NSW, QLD and ACT residents only.
3.89%
4.90%
\$0
\$0 p.a.
80%
Get a low fixed rate and pay no application or ongoing fees.
3.59%
4.61%
\$0
\$395 p.a.
90%
A fixed rate loan with a 100% offset account and the option to make additional repayments. Loans over \$150000 receive a discounted rate. NSW, QLD and ACT residents only.
3.99%
4.62%
\$395
\$0 p.a.
80%
Investors can enjoy flexible repayments and an easy application process with this pioneering online lender.

### Compare up to 4 providers

#### Related Posts

##### UBank UHomeLoan Variable Rate - Discount offer for Owner Occupiers, P&I Borrowing over \$200,000

Take advantage of a low-fee mortgage with a special interest rate of just 3.59% p.a. and a 3.59% p.a. comparison rate.

##### Athena Variable Home Loan - Refinance (Owner Occupier, P&I)

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##### RAMS Fixed Rate Home Loan - 2 Year Fixed Rate (Owner Occupier, P&I)

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