How to Pay Off Your Home Loan Faster

Even small changes to how you manage your home loan can make a big difference in how much interest you pay and how quickly you can be mortgage-free. With cost of living increasing in Sydney and around Australia, here are some effective strategies to help you reduce your home loan faster.

1. Make Weekly or Fortnightly Repayments Instead of Monthly

Switching from monthly to weekly or fortnightly repayments can reduce your interest with minimal effort.

Here’s why:

• Interest is calculated daily and charged monthly.

• By making repayments more frequently, your loan balance decreases faster, so you’re charged less interest overall.

This method aligns well with weekly or fortnightly pay cycles, making budgeting easier.

2. Use a Mortgage Offset Account

An offset account is a transaction account linked to your home loan. The balance in this account reduces the amount of your loan on which interest is calculated. The more you keep in your offset account, the more interest you save.

Benefits of an Offset Account:

• Reduces the interest on your home loan.

• You can access your money anytime, like a regular transaction account.

Tip: Maximise savings by directing your salary and savings into your offset account and keeping the balance as high as possible.

3. Make Extra Repayments

Any extra repayments, even small ones, can significantly reduce the interest you pay and the time it takes to pay off your loan. For example, adding just $50 or $100 a month can add up over time.

Why it works:

• The more you repay now, the less interest accumulates.

• You can often access these extra repayments later if you need them through a redraw facility.

Tip: Use a home loan repayment calculator to see how extra repayments can speed up your loan payoff and save you money.

4. Consider Changing Your Loan Conditions

Have a Home Loan Health Check

Your needs and financial situation may have changed since you first took out your loan. Reviewing your loan regularly could help you find:

• A lower interest rate.

• Better features that save you money in the long run.

A Castell Home Lending Specialist can help you assess your current loan and explore better options.

Split Your Loan

If you’re concerned about interest rate changes, splitting your loan can offer stability and flexibility. You can:

• Fix part of your loan for a set term to lock in your repayment amounts.

• Keep the rest on a variable rate for flexibility and the option to make extra repayments.

Splitting your loan can provide peace of mind while still giving you room to save on interest.

By taking these steps and regularly reviewing your mortgage with Castell, you can reduce your interest costs and pay off your home loan faster.