7 Ways to pay down your home loan faster
Seven simple and effective things you can do to reduce your home loan sooner.
Read in this article
- You don’t need to win the lottery to pay off your home loan early.
- 1 Switch to weekly/fortnightly repayments, pay fortnightly or weekly instead of monthly
- 2 Make extra repayments, extra funds have the immediate effect of reducing the loan balance
- 3 Better still, open an offset account and have your salary paid into an offset account, which is linked to your loan account
- 4 Align your salary and home loan payments
- 5 Pay your salary into your home loan
- 6 Reduce your expenses
- 7 Keep repayments up, even if interest rates fall
- Frequently Asked Questions: Mortgage Acceleration
You don’t need to win the lottery to pay off your home loan early.
There are a number of wise strategies for reducing your loan balance and saving thousands in interest repayments. It’s never too late to begin, so read through some of the strategies people use.
1 Switch to weekly/fortnightly repayments, pay fortnightly or weekly instead of monthly
Mortgage interest is actually calculated on the outstanding amount daily so the more frequently you pay, the more you will save, even if you are not paying any more than you did previously.
2 Make extra repayments, extra funds have the immediate effect of reducing the loan balance
Every dollar you put on your repayments will reduce the principal amount outstanding and therefore the interest payable next repayment. This savings then compounds, making a significant impact on the life of the loan. Your loan’s redraw facility offers an easy and efficient way to use the value of these additional repayments.
3 Better still, open an offset account and have your salary paid into an offset account, which is linked to your loan account
This allows you to use the surplus of your savings account balance to reduce the amount owed towards your loan.
The balance is deducted from your loan account before the interest on your home loan is calculated which means less interest is charged to your loan. Speak with your adviser about this more.
4 Align your salary and home loan payments
Align your loan repayment period with your salary payment date in order to maximise the amount you have available to pay onto your home loan.
5 Pay your salary into your home loan
An all-in-one-loan-account allows you to pay your salary directly into your loan, which reduces the principal amount owing and thereby the amount of interest charged. It acts as a combined mortgage, savings and cheque account, allowing you to access the funds you have left over and above the minimum monthly repayment amount to pay monthly expenses.
6 Reduce your expenses
Make a list of your regular weekly/monthly expenses and find a few that you can remove. Put any savings towards your home loan – remember that every dollar counts.
7 Keep repayments up, even if interest rates fall
When interest rates do come down, resist the temptation to reduce your monthly repayments to the lower minimum payment required. Maintaining the same original repayment is a simple and effective way of helping to pay down your mortgage faster.
Frequently Asked Questions: Mortgage Acceleration
Why is interest calculated daily but charged monthly?
This is the Institutional Logic of banking. Every day, the bank looks at your outstanding balance ($P$) and applies the daily interest rate ($r/365$). The formula is:
$$Daily\ Interest = P \times \left(\frac{r}{365}\right)$$
By making payments more frequently (weekly or fortnightly), or by holding cash in an offset account, you reduce $P$ earlier in the month, meaning you pay less interest over the long term. Even a few dollars' difference in $P$ each day compounds into thousands of dollars in savings over 30 years.
How does an Offset Account provide a 'Tax-Free' return?
In a standard savings account, the interest you earn is taxable income. However, an Offset Account doesn't "earn" interest; it "saves" you from paying it. Because saved interest isn't classified as income by the ATO, every dollar you save is effectively an Absolute tax-free gain. In 2026, if your mortgage rate is 6%, your offset account is providing a guaranteed return that would require a ~9% pre-tax return in the stock market to beat.
What is the 'Fortnightly Payment' secret?
Most people think paying fortnightly is just about frequency. The real Sovereign advantage is that there are 26 fortnights in a year. By paying half of your monthly requirement every fortnight, you end up making 13 full monthly payments per year instead of 12. This extra month of principal reduction is applied directly to the loan balance, potentially shaving 4-5 years off a standard 30-year term.
Should I prioritize extra repayments or my Emergency Fund?
If you have a Redraw Facility or an Offset Account, you can do both. These structures allow you to "park" your emergency cash against your loan to save interest, while keeping the funds accessible if a Financial Train Wreck occurs. This is the definition of making your money work "Double-Alpha"—reducing debt while maintaining liquidity.
Why keep repayments high when interest rates fall?
When rates fall, the minimum repayment required by the bank drops. If you lower your payment, you maintain the same 30-year trajectory. If you keep your payment at the higher level, 100% of the difference goes toward Principal Reduction. This accelerates the equity-building phase of your loan and reduces your total interest exposure before the next rate cycle begins.
Disclaimer: Mortgage structures and tax implications are subject to individual circumstances and lender policies. In 2026, the rise of "at-call" debt makes efficient mortgage management a baseline requirement for financial stability. For a strategic audit of your debt structure, we recommend a confidential consultation.
Call us today on 1300 137 403 or email us here for a no-obligation private chat about your situation.
Drew Browne is a specialty Financial Risk Advisor working with Small Business Owners & their Families, Dual Income Professional Couples, and diverse families. He's an award-winning writer, speaker, financial adviser and business strategy mentor. His business Sapience Financial Group is committed to using business solutions for good in the community. In 2015 he was certified as a B Corp., and in 2017 was recognised in the inaugural Australian National Businesses of Tomorrow Awards. Today he advises Small Business Owners and their families, on how to protect themselves, from their businesses. He writes for successful Small Business Owners and Industry publications. You can read his Modern Small Business Leadership Blog here. You can connect with him on LinkedIn. Any information provided is general advice only and we have not considered your personal circumstances. Before making any decision on the basis of this advice you should consider if the advice is appropriate for you based on your particular circumstance.
