How to Pay Off Your Mortgage Faster

To pay off your mortgage faster, put a sustainable surplus towards the loan or an eligible offset account, and keep repayments up when interest falls. Choose extra repayments for direct debt reduction, or an offset when you need ready access to savings. A shorter term works only when its higher required repayments fit your budget.

Set a Sustainable Repayment Target

Set your extra mortgage contribution from verified income after household costs, required debt payments and money reserved for emergencies. Read recent bank statements alongside your payslips, and allow for annual bills that won’t appear in every month. Divide yearly insurance, rates and registration costs into monthly amounts before calling money a surplus.

For example, a fictional household receives $8,000 a month after tax. Its ordinary spending and required debt payments total $6,900, with another $600 reserved for irregular bills and building its cash buffer. That leaves $500 for an extra contribution, even though the account initially appears to have $1,100 spare.

Separate that recurring $500 from a bonus or tax refund. A windfall can fund a single additional payment, but it can’t support a larger automatic payment every month.

Pay required bills and minimum debt repayments first. For other debts, Moneysmart’s debt repayment guidance prioritises extra money towards the debt with the highest interest and fees. Carrying expensive card debt while making extra mortgage payments can cost more overall.

Keep a cash buffer you can actually access. Moneysmart’s emergency fund guidance suggests three months of expenses as a target, with more where circumstances require it. An eligible offset can hold that reserve while reducing mortgage interest.

The disadvantages of paying off a home loan early centre on cash access and competing needs. Paying every spare dollar into the loan leaves less for repairs, time off work or other goals. Choose an extra contribution that doesn’t force you to borrow again when an expected bill arrives.

Compare Extra Repayments With Offset Savings

Extra repayments reduce your mortgage balance, while offset savings reduce the balance charged interest and remain in a separate account. With the same rate and repayment schedule, a 100% offset can produce the same interest reduction as an equal extra payment. Fees and access conditions can change which option suits you.

This illustration starts on 3 October 2026 with a $500,000 principal-and-interest loan, a constant 6% annual rate and 30 years remaining. It uses monthly interest at 6% divided by 12 and a $2,997.75 month-end repayment. The comparison adds $20,000 immediately, leaves it in place for 12 months and excludes all fees.

All model figures use unrounded repayments, with results displayed to the nearest cent.

Method	Loan balance after 12 months	Offset savings after 12 months	Loan less offset savings	Interest charged over 12 months
No extra payment or offset	$493,859.94	$0	$493,859.94	$29,832.97
$20,000 extra payment at the start	$472,626.39	$0	$472,626.39	$28,599.42
$20,000 in a 100% offset throughout	$492,626.39	$20,000	$472,626.39	$28,599.42

Both methods save about $1,233.56 in this simplified model. In the offset case, the loan itself is $20,000 higher because the savings haven’t repaid principal. Spending that $20,000 removes its future interest benefit.

The model holds repayments constant. Actual loans usually calculate interest daily, so payment dates affect the result. Moneysmart’s offset explanation distinguishes accessible offset savings from extra repayments available only under the loan’s redraw terms.

Choose an offset when you need transaction-account access to the money and its extra costs are justified. Extra repayments suit money you intend to leave against the debt. Redraw is access to earlier extra payments, subject to the lender’s contract, including any limits, delays or fees.

Before transferring savings, identify whether the offset is 100% or partial and which loan account it reduces. Check the linked account in online banking or statements, especially after switching products. A deposit in an account that isn’t correctly linked provides no offset benefit.

Fixed loans can restrict extra repayments or have fewer offset options, as Moneysmart’s fixed-rate guidance explains. For Australia and New Zealand Banking Group (ANZ), as at October 2026, the annual tolerance is the lesser of $5,000 or 5% of the balance at the fixed period’s start. Its fixed-loan terms say exceeding that tolerance can trigger an early repayment cost.

That ANZ limit applies to each year of its fixed period. It isn’t a limit shared by every lender. A planned $20,000 extra repayment needs to fit your own loan’s conditions before you make it.

Check Repayment Frequency and Loan Term

More frequent repayments help most when they increase the amount paid each year. Match the payment dates to your income, then compare the annual totals. Moneysmart’s mortgage repayment guidance explains why half a monthly payment every fortnight adds an extra monthly payment over a 26-fortnight year.

Consider an assumed $3,000 monthly repayment. These schedules have different effects on your budget.

Payment schedule	Amount each payment	Payments per year	Annual amount
Monthly	$3,000	12	$36,000
Half the monthly amount every fortnight	$1,500	26	$39,000
Same annual total divided fortnightly	About $1,384.62	26	About $36,000

The $1,500 schedule adds $3,000 a year. Dividing $36,000 into smaller instalments changes timing but doesn’t add that extra $3,000. Earlier payments can still reduce daily interest, but their effect differs from paying more.

Paying Off a Mortgage in Seven or Ten Years

A seven-year or ten-year goal requires repayments large enough to clear the actual balance within that period. A 30-year loan doesn’t have to run for 30 years if the contract permits additional payments. A formal shorter term makes the larger payment compulsory.

For a $500,000 balance at a constant 6% annual rate, these illustrative month-end payments use monthly interest and exclude fees. They assume no offset, windfall or separate extra contribution.

Target repayment period	Monthly payment required	Extra above the 30-year amount
30 years	$2,997.75	$0
10 years	$5,551.03	$2,553.27
7 years	$7,304.28	$4,306.52

The differences use unrounded calculations, so displayed cents can differ by one cent when subtracted. The rates are assumptions, not lender offers. A goal of seven years needs about $4,307 more each month in this example, which a payment-frequency change alone won’t provide.

Use your current balance, rate and contribution to estimate how long your mortgage will take to repay. A lender’s repayment schedule or Moneysmart mortgage calculator can give a starting estimate. Rates, withdrawals and future extra payments change the date.

Keep a longer contractual term with voluntary extra payments if you need flexibility and the loan permits them. Choose a formal shorter term only when the larger required payment remains affordable through the household changes you can reasonably anticipate.

Assess Whether Refinancing Helps

Refinancing helps a faster-payoff plan when interest savings exceed switching costs and the new repayment schedule preserves your target. Ask your existing lender about a lower rate first. A rate reduction on the current loan can avoid the costs of changing lenders.

Compare discharge and application fees, fixed-loan break costs, ongoing charges and any new lenders mortgage insurance (LMI). LMI protects the lender against a shortfall after default. Moneysmart’s switching guide explains that it can add to refinance costs when equity is low.

Use the current remaining term as the first comparison. This separate illustration assumes a $500,000 balance, month-end payments and monthly interest. Rates remain constant throughout, and all fees and offset savings are excluded.

Loan option	Annual interest rate	Term from today	Monthly payment	Total interest from today
Existing loan	6%	20 years	$3,582.16	$359,717.27
Refinance preserving the term	5.5%	20 years	$3,439.44	$325,464.77
Refinance restarting the term	5.5%	30 years	$2,838.95	$522,020.20

The 30-year option reduces the required monthly payment, but adds ten years and about $162,303 in interest against the existing loan. The same lower rate over 20 years reduces modelled interest by about $34,253 before switching costs. Maintaining the old repayment at the lower rate would shorten that 20-year term further.

Compare actual written offers with the same balance, planned contribution and repayment horizon. Include the cost of retaining offset or redraw access. A cheaper headline rate can lose its advantage if the loan’s fees rise or its features don’t support the way you use savings.

Your broker can use Bulma to check refinance eligibility against lender policies, with the policy wording quoted behind each answer. Rates, fees and product pricing come from the lender’s offer. Keep those costs in the comparison alongside the proposed term.

Review the Plan When Circumstances Change

Review your extra contribution when income, living costs or required repayments change, and rebuild the cash buffer after using it. Parental leave, reduced work hours, illness or a new dependant can reduce the money available. A pay rise can increase the contribution after allowing for other commitments.

A rate rise uses more of the budget for required payments. When a rate falls, retaining the old payment can direct more towards principal. Review again before a fixed period ends, because the rate and payment can change at that point.

Worked Example: An Extra $500 Each Month

This illustration is prepared on 3 October 2026 and uses a $500,000 principal-and-interest balance with 30 years remaining. It assumes a constant 6% annual rate, monthly interest and month-end repayments. There are no fees, offset savings or lump sums.

The scheduled payment is $2,997.75 a month. Paying another $500 each month raises the payment to $3,497.75 and clears the balance on the 252nd monthly payment. That is about 21 years, roughly nine years earlier than the original schedule.

An individual repayment calculation needs your actual loan terms and payment dates. This illustration assumes the extra $500 continues throughout and the loan allows it. If the contribution stops or the rate rises, the payoff date moves.

Write down the contribution, where it goes and the minimum cash reserve. At each review, compare the actual loan balance and accessible savings against that plan. National benchmarks in the Australian mortgage debt guide answer a different question from your own repayment schedule.

Use a Credit Card Alongside an Offset

Keeping cash in an offset until the credit card payment falls due can reduce mortgage interest. Income goes into the offset, eligible everyday purchases go on the card and the full statement balance is paid by its due date. Pay it in full every month.

The saving depends on the extra balance and the number of days it remains in the offset. Assume a 100% offset, a constant 6% mortgage rate and an extra $3,000 kept there for exactly 30 days. Using a 365-day year, the mortgage interest saving is about $14.79 before any costs.

Compare that saving with card interest, annual fees and purchase surcharges. Extra spending can also consume the saving. Moneysmart’s credit card guide explains that interest-free days depend on paying the full balance by the due date.

Can You Pay a Mortgage With a Credit Card?

A card-funded mortgage payment shifts debt to the card, leaving the combined debt unchanged before fees. Acceptance of a direct card payment depends on the lender’s payment arrangements. An offset-and-card strategy uses the card for purchases while the mortgage payment comes from your own cash.

Transferring borrowed card funds to an account can be a cash advance. Commonwealth Bank (CommBank), as at October 2026, classifies card-to-account transfers as cash advances. Its cash advances generally attract fees and interest without an interest-free period, with exceptions governed by the particular card and balance.

Use the offset-and-card method only when your spending remains controlled and cash covers the full card bill. Set a full-balance payment before the due date and keep the required cash available. If you carry a card balance, stop using this method and use your budget to reduce that debt.