3 strategies to pay off your home loan faster and save thousands!
 "3 strategies to pay off your home loan faster and save thousands!")
Paying off your home loan sooner can save you a significant amount of money in interest and help you achieve financial freedom faster. But the key is to control the controllables. Most of us hope and pray that interest rates will come down, that we'll get a pay rise, or that we'll have money left over each month. But relying on external factors won't get you ahead.
Ready to take control of your financial future? Keep reading to discover three powerful strategies that can help you pay off your home loan faster and save thousands in interest!
These three simple, repeatable strategies put you in control of your own path—helping you smash your mortgage in the process. Adopt one, or all three, and watch your total interest costs plummet.
1) Switch to fortnightly or weekly repayments
By switching to fortnightly or weekly payments instead of monthly, you effectively make an extra repayment each year. This small change can help you pay off your loan faster and reduce the total interest paid.
For example, on a $500,000 loan at 6% interest over 30 years:
Repayment Method | Repayment Amount | Total Interest Paid | Interest Saved | Time Saved |
Monthly | $2,997.75 | $579,191 | $0 | 0 years |
Fortnightly | $1,498.88 | $455,131 | $124,060 | 5 years, 6 months |
Weekly | $749.44 | $454,581 | $124,610 | 5 years, 6 months |
Switching to fortnightly or weekly repayments can save you over $124,000 in interest and help you become mortgage-free 5 years and 6 months earlier.
2) Make extra repayments
Any extra money you can put towards your mortgage—such as tax refunds, bonuses, or savings—will reduce the principal and save you interest over the life of the loan. Even small additional payments can make a big difference over time.
For example, on a $500,000 loan at 6% interest over 30 years, making an extra $200 per month from the start of the loan can have a significant impact:
Repayment Type | Monthly Repayment | Total Interest Paid | Interest Saved | Time Saved |
Minimum Repayments | $2,997.75 | Standard Interest | $0 | 0 years |
With Extra $200 | $3,197.75 | $476,044.71 | $103,146.29 | 4 years, 6 months |
By simply contributing an extra $200 per month, you can save over $103,000 in interest and pay off your loan 4 years and 6 months earlier.
Even if you can't commit to extra payments every month, occasional lump sum payments—such as tax refunds or work bonuses—can also help reduce your loan balance and interest costs.
3) Use an offset account
An offset account links to your home loan and reduces the amount of interest you pay by offsetting your loan balance with the amount in your savings. This can be a highly effective way to cut interest costs and pay off your mortgage faster.
For example, on a $500,000 loan at 6% interest over 30 years, keeping $50,000 in an offset account can have a significant impact:
Offset Balance | Monthly Repayment | Interest Saved | Time Saved | Revised Loan Term |
$50,000 | $2,997.75 | $194,606.16 | 5 years, 5 months | 24 years, 7 months |
By maintaining an offset balance of $50,000, you can save nearly $195,000 in interest and reduce your loan term by over 5 years. The more funds you keep in your offset account, the greater the savings and time reduction.
Imagine the peace of mind that comes with knowing your home loan is paid off years ahead of schedule. Whether you switch to fortnightly payments, make extra repayments, or use an offset account, every step brings you closer to financial freedom.
Don't wait—take action now! Book a 10-minute chat with us today to know more.
 "Chris Collard")
Author:Chris Collard| Tags:Home loansrepaymentsoffsetpay off |
