How to Pay Off Your Mortgage Faster

💪 Extra repayments, the biggest lever🔗

Every dollar paid above your minimum repayment reduces your principal immediately, which means every future interest calculation is based on a smaller balance. Because mortgage interest compounds against you the same way investment returns compound for you, extra repayments made earlier in the loan have an outsized effect compared to the same extra amount made later.

🔄 Offset accounts vs redraw facilities🔗

Both achieve a similar underlying goal, less interest charged, without fully committing your money to the loan. Which one suits you better usually comes down to how often you expect to need access to that money, covered in more detail in our offset vs redraw breakdown.

📊 How big a buffer other Australians actually hold🔗

🎯 The essential: The typical established mortgage holder is sitting well ahead of schedule, but new borrowers are the exception, and the ones most worth building a buffer deliberately.

The Reserve Bank tracks how far ahead of their scheduled repayments Australian mortgage holders actually sit, combining offset balances and redraw available. Its most recent Financial Stability Review data put the median borrower's prepayment buffer at somewhere between 10 and 15 months of scheduled repayments, larger than it was before the pandemic for every income group except the very top, which held closer to two years' worth on its own. That's a genuinely large cushion, built up gradually through exactly the extra repayments and offset habits covered in this article.

The RBA has flagged an important exception worth knowing, though: those buffers are concentrated in established loans, borrowers who've had years to build them up. Newer borrowers typically hold far smaller buffers, simply because they haven't had the time, while often carrying larger loans taken out more recently. If you're early in a mortgage, the national "months ahead" figure isn't yet describing your own position, and building toward it deliberately, rather than assuming it happens automatically, is exactly the gap the extra-repayment and offset habits above are meant to close.

💰 Putting lump sums to work🔗

A tax return, bonus, or inheritance directed straight into an offset account or as an extra repayment has an immediate, guaranteed effect: less interest charged from that point forward. There's no market risk in that return, unlike most other places you could put a lump sum.

🔁 Refinancing to a better rate🔗

Loyalty rarely pays with mortgages, lenders often offer sharper rates to new customers than they do to existing ones. Periodically checking your rate against what's currently available, and being willing to ask your lender to match it or refinance elsewhere, is a legitimate, low-effort way to reduce the total interest paid over the life of the loan. Refinancing is also a natural moment to reconsider whether fixed, variable or split still suits your situation. And once you've finally made your last repayment, whether early or on schedule, don't assume the loan closes itself, our guide to discharging a mortgage covers the formal steps you still need to take.

⚖️ The trade-off with investing instead🔗

Extra mortgage repayments are a guaranteed return equal to your interest rate. Investing instead offers a potentially higher but genuinely uncertain long-term return. Neither choice is objectively correct, it depends on your own interest rate, timeframe, and comfort with the two different kinds of risk involved. Many people do both, some extra repayments alongside consistent investing, rather than treating it as all-or-nothing. A more advanced middle path, debt recycling, turns part of your mortgage into deductible investment debt over time.

❓ Frequently asked questions🔗