Money · 5 min read
How can you pay off your mortgage faster?
When we bought our first place, the mortgage felt like a fixed thing you just quietly paid for thirty years. Then we sat down and actually ran the numbers, and were genuinely surprised how much a few small changes could save. Here's what we learned, in plain English.
Why extra repayments punch above their weight
Here's the bit that clicked for us: interest is charged on what you still owe. So anything you pay above the minimum comes straight off the principal, and shrinks the balance every future interest calculation is based on. That's why a modest extra amount each month can quietly take years off the loan.
And timing matters more than the amount. The earlier you make extra repayments, the more time there is for the saved interest to compound in your favour.
The fortnightly trick
This one felt almost like cheating. Pay half your monthly amount every fortnight, and because there are 26 fortnights but only 12 months, you sneak in an extra month's repayment a year without really feeling it. Small change to your cash flow, real dent in the balance.
What an offset account really does
We knew what an offset account was. What we underestimated was how much the balance sitting in it actually mattered. It's an everyday account linked to your loan, and its balance is subtracted from your loan balance before interest is worked out. Keep your salary and savings in there and you pay less interest, while your money stays completely available to use.
It works on every single day's interest, for as long as the money sits there, so the bigger the balance and the longer it stays, the more it quietly saves. Putting our own numbers in and watching the difference is what finally made it land.
The app that helps
Mortgage Planner
Finally understand what your mortgage really costs, and test any what-if.
- Model extra repayments, lump sums and an offset balance
- See your real payoff date and total interest update live
- Compare what-ifs side by side, a rate rise, fortnightly, a windfall
Common questions
Do extra repayments really make a difference?
Yes, more than most people expect. Because interest is charged on the balance, extra repayments cut both the balance and all the future interest on it, especially early in the loan.
Offset account or extra repayments?
They work in a similar way, but an offset keeps your money accessible instead of locked into the loan. The best choice depends on your loan and how much cash you want to keep on hand, which is exactly the kind of thing worth modelling first.
A quick note
This post shares what we learned from our own mortgage, as general information, not financial advice. Everyone's situation is different, so for decisions about your loan or finances it's worth speaking to a licensed financial adviser, mortgage broker or your lender. Any figures in our app are estimates to help you explore options, not a quote or a guarantee.