Skip to main content Skip to main navigation
Skip to access and inclusion page Skip to search input

How to pay off your home loan faster

For many people, owning your own home has always been the great Australian dream. Whether you’re an owner-occupier or have an investment property, there are definitely benefits that come with paying off your mortgage before your loan term ends. So – how can you pay off your home loan sooner? Let’s explore a few tips and tricks that will help you pay down your mortgage faster – and realise the dream of owning your property outright.

 Why should I pay off my home loan early?

There are a few reasons people try to pay off their home loan faster than the original loan term. 

To become debt-free

A mortgage is often the biggest debt you'll take on in your lifetime – and the idea of being in debt can be undesirable to some people. Paying off your mortgage not only means you’ll be debt-free, but it can also bring peace of mind and a sense of ownership and pride.  

This is especially relevant to homeowners nearing retirement age. Knowing that your mortgage is paid off in full gives a sense of security. No one know what the future holds, so owning your home outright can put people at ease.  

To pay less interest

The amount of interest charged to your home loan account during the life of a loan can be pretty significant. By paying off your home loan faster, you can potentially save yourself a fair chunk of change in interest. Even shaving a few years of your mortgage could mean significant savings in interest, which means more money in your bank account.

To build equity faster

Equity is the difference between the market value of your property and the amount you still owe on your home loan. Equity can build up over time as you reduce your loan amount with principal and interest repayments, and if the market value of the property increases.

If you’re keen to boost the amount of equity you can tap into for other financial goals (think investing in another property or the share market), paying off your home loan faster can help you get there.  

How can I pay off my home loan sooner?

There are a few small changes you can make now that will have a big impact on how long it takes you to pay off your mortgage – and how much interest you pay.

Increase your regular repayment amount

By increasing the amount you repay to your lender, you could reduce the amount of time it takes to pay off your mortgage. Paying more than the minimum repayment required will chip away at the amount of the principal loan you’re paying back, and also the amount of interest you pay over the life of the loan. 

For example, if your monthly mortgage repayment is $1,800 – you might consider rounding this up and paying $2,000 instead. You might not feel the slight increase in expenses on your bottom line, but the payoff could mean paying off your mortgage faster.

Curious about how quickly you could pay down your loan and how much you could save with a few tweaks to your repayments? Try our mortgage repayment calculator to find out. 

Make more frequent repayments

A little-known hack that can help you become mortgage-free faster: switch your monthly mortgage payment to weekly or fortnightly. By upping the frequency and making the switch from a monthly payment, you’ll be paying down an extra month’s home loan repayment each year. It doesn’t involve much discipline or sacrifice on your end – and you’ll barely notice it!   

Make extra repayments

Some people choose to direct lump sum payments (like your tax refund, work bonuses or an inheritance) straight to their mortgage. These additional repayments can have a big impact on how quickly you pay off your home loan – especially in the early years of your loan.  

Something to keep in mind about interest rates

When you initially decide on a home loan, interest rates will play a big part in your decision. You’ll need to choose whether you want a fixed interest rate or variable interest rate – or a mixture of both (known as a split loan). 

Fixed rate home loans provide you with stability in terms of repayments, but also locks you into the mortgage for a set term. This means that you can fix the interest rate with your lender and be certain that your repayment amounts won’t change for the duration of the fixed rate term - even if interest rates rise. Although fixed rates give you the benefit of locking in your interest rate, there are often limits on the extra repayments you can make. If you’re looking to pay down your mortgage quickly by increasing your repayments or adding a lump sum, a fixed rate home loan might not be the right loan for you.  

Variable rate home loans give you more flexibility, but you may be impacted by interest rate rises. When you take out a variable interest rate home loan, there is often no limit on the amount of extra payments you can make – but always make sure you read the fine print. You can use our interest rate change calculator to see how interest rates impact you.

Set up an offset account or redraw facility

Opting for a home loan with an offset or redraw facility can help you reduce the amount of interest you pay – and therefore the amount of time your home loan takes to pay back to your lender. The more money you keep in your offset account or redraw facility, the bigger the savings and the faster your loan can be paid off. 

Say you have a home loan balance of $500,000 and you keep your savings ($25,000) in an offset account. You’ll only pay interest on your loan balance of $475,000, rather than the $500,000 – as the $25,000 is offsetting the amount of interest you need to pay.  

Choose a principal and interest loan

When you look into home loans, there are a generally two home loan repayment options available to you – interest only and principal and interest.  

If you choose interest-only repayments, you’re only paying off the interest portion of your home loan, plus any fees. The total amount you have borrowed (the principal) stays the same. Selecting interest only repayments means that your repayments will be lower for a set period of time, but these repayments will be higher when the interest only period ends.  

Principal and interest payments go towards paying off the amount you have borrowed (the principal) and the interest, plus any fees. By the end of the loan term, you’ll have repaid the amount borrowed, the total interest owed – and you will be mortgage-free.


Refinancing your current loan could potentially score you a lower interest rate. If you get the better rate and keep your repayments the same as the old loan, you’ll end up reduce the term of your loan. It pays to see what else is out there. Use our refinance calculator to see how much you could save when you switch your home loan from another bank to us.

Have a home loan with another lender? No worries. Our team can help you find a home loan that better suits your needs, help you refinance from your current lender and make the switch to Westpac.

What happens when you pay off your mortgage in full?

So you’ve knuckled down, made some changes to your home loan and you’re on track to pay your mortgage off early. But what happens then?  

Well, you’ll own your home outright and be completely mortgage-free– which is a big deal and something worth celebrating. Now that you’re no longer paying regular mortgage repayments, you’ll have extra cash in your budget to put towards other things that are important to you.  

Some people choose to direct the extra money towards other asset classes and investments. This money might go towards topping up your superannuation fund or retirement savings or to start investing in the share market.

You might also choose to leverage the equity you’ve built up in the property to help you reach other financial goals – like buying an investment property – by  topping up your loan or taking out a supplementary loan. 

Now that you’re mortgage-free, there are plenty of exciting options available to you. Chat to your financial planner or financial adviser about your goals and personal objectives before making a decision.

We’re here to help

At Westpac, our Home Finance Managers are experts in all things home loans. If you have questions about paying off your home loan sooner or if you’ve paid off your home loan and aren’t sure about your next move – we're here to help. For more information, call us on 132 558 or visit a branch to chat to your local Home Finance Manager.

Things you should know

This information is general in nature and has been prepared without taking your objectives, needs and overall financial situation into account. For this reason, you should consider the appropriateness of the information to your own circumstances and, if necessary, seek appropriate professional advice. Credit provided by Westpac Banking Corporation ABN 33 007 457 141 AFSL and Australian credit licence 233714.

Key Fact Sheet for Home Loans