5 Ways to pay off your home loan faster

A home loan is one of the biggest investments you will make in your life. It’s a debt burden that most people are stuck with and would like to eliminate as soon as possible. That’s why Pacific Finance Australia has put together a list of ways you can pay off your home loan more quickly.

Making payments more frequently

It’s better to be making fortnightly repayments as opposed to monthly. That’s because when you pay fortnightly, you’re making 26 payments a year. If you were to instead split your monthly repayments in half, you would only be making 24 payments each year—two for each month. By structuring your loan with fortnightly payments, however, you’re paying down the equivalent of 13 months every year.

Since the repayments are individually smaller, you’ll hardly feel the difference and it should not impact your disposable income. Over the term of the loan however, this will make a huge difference and you will end up paying it off much earlier and with less accumulated interest than you anticipated.

Consolidating your debts

When you take out a personal loan or have a credit card, the interest rates you pay are much higher than the interest on your home loan. By consolidating your debt into your home loan, you are paying less in interest across all your loans. This can help you free up cash to make extra repayments to your home loan instead, which will benefit you in the long run.

Paying less interest and fewer fees makes the idea of consolidating your credit card debt into your home loan attractive, but you have to make sure you structure the consolidation in a way that doesn’t end up costing you more. As most home loans are for a period of 30 years, and credit card debts are for the length of time that it takes you to pay it off, you may end up paying more as you will be paying off your smaller debt for a longer period of time.

Offsetting your home loan

An offset account is a popular feature available on eligible everyday transaction accounts and eligible home loans. An offset account and the home loan are usually linked to reduce the overall interest on your mortgage or investment loan. By maintaining savings in an offset account with your mortgage provider, the interest you would normally receive on those savings instead goes to offsetting some of the interest payments that you would otherwise accrue on your home loan.

For example, you have a 30-year mortgage worth $300,000 and an interest rate of 3.90%, and you also maintain a $20,000 offset savings account with the same lender. Then the interest earned on that $20,000 could potentially save you $40,085.37 in mortgage interest repayments over the life of the loan.

Switching to a lender with a better rate

By seeking help from financial brokers, you may be able to find a lender better suited to your needs with a lower interest rate. With a lower interest rate, you could make the same repayments but end up paying off your loan a lot sooner. Do be aware though, that some lenders have exit fees on the loan so keep that in mind before making the big move.

Paying off the upfront fees

When you go to take out a loan, some lenders will allow you to borrow the upfront costs and mortgage fees. Be aware that by financing these costs, you’re just adding to the amount that you’re borrowing and will, therefore, take longer to pay it off—accruing interest all the way. If you can avoid financing your upfront fees with additional debt, you’ll reap the benefits in the end.


If you require further information or need assistance with your home loan, please contact the finance specialists at Pacific Finance Australia on 08 9321 2120 or send us an email at info@pacificfinance.com.au