Owning a home is part of the great Australian dream. Millions of Australian consumers scrimp and save for years in order to save up for a deposit on a property. But the sacrifice is all worth it in the end, as property is an excellent investment that will most likely increase in value as the years pass. 

However, owning a home also means committing to a mortgage that usually lasts over twenty years. This is a significant financial burden; for many, it's the most money they'll ever borrow in their lives. So it makes sense to attempt to pay off your mortgage faster. But how exactly do you do this? 

But before you learn how to pay your mortgage off quickly, you need to understand all the components and financial assets that accompany managing a mortgage. If you’re googling questions like ‘what is an offset account?’ or ‘what are interest rates?’, then this is the read for you. 

This helpful article will share five tips that will get you well on your way. Continue reading to learn more.

1. Make Extra Repayments

The quickest way to pay off your mortgage is to make additional repayments on top of your mandated minimum monthly amount. You'll have a contracted amount of repayments that will vary if you have a variable interest rate that you need to make each month. If you can afford it, paying additional amounts will slowly bring down the principal owing and shorten the length of your home loan. For instance, if you paid twice what you are contracted to repay, you could half the duration of your home loan.

Another benefit to making extra repayments is accessing these additional funds via a redraw facility, which can function like a savings account. If you get into financial strife and need emergency home repairs or car repairs, you should have a pool of money you can dip into as you need.

2. Switch to Fortnightly Repayments

Another great way to shave some time off your mortgage is to make repayments fortnightly instead of just making your standard monthly  repayments. As there are 26 fortnights in a year versus 12 months, you'll make extra repayments this way. 

What’s more is that if you're a double-income family and you both make fortnightly repayments, you could reduce your home loan's length by years. Just remember to make repayments that don’t impede on your household budget too much. You don’t want to go without just for the sake of eradicating debt. And if the value of your home grows, you can still enjoy building equity even if you’re unable to pay off your mortgage as quickly as you’d like to.

3. Refinance Regularly 

You shouldn't show any loyalty to your bank. Banks are gigantic entities with billions of dollars of revenue and profit each year. To them, you represent percentage points of profit margin. Instead, you should review your home loan options regularly and refinance for a better deal when possible. Looking out for yourself, your family, and your needs are a priority.

When you refinance, you can often lock in a lower interest rate, meaning you'll pay less interest on the total amount owing. With lower interest rates, your repayments go towards the principal amount, and you'll repay your loan sooner. An added benefit of refinancing is that other banks will often offer other benefits for switching, such as great deals on credit cards or personal transaction accounts - which is worth it if you're financially savvy and disciplined.

4. Consider an Offset Account

As we briefly touched upon earlier, taking out a mortgage may provide you with the opportunity to maintain an offset account. This is essentially a transaction or savings account that’s linked to your mortgage. The amount in this account reduces the interest you pay on your home loan, which will help you pay off your mortgage quickly. 

For instance, if you have a mortgage of $500,000 with $50,000 in your offset account, you will only be charged interest on $450,000, which is a significant saving. An offset account may only be worth it if you have a decent amount of cash stored there – less than $10,000 may not be worth it. It can be good to use your offset for savings or to park a windfall you've received, such as from an inheritance or sale of an asset.

5. Make Household Savings

Part of paying off your mortgage early means having spare cash, and this can be tricky with the rising cost of living and inflation. It's worth seeing if you can make some savings on your household expenses where possible. For instance, take advantage of loyalty point offers at the supermarket and cut back on snacks and treats to save some money. You could also review your insurance, utilities and subscription expenses to save money. 

Other expenses you can cut are unnecessary spending, such as online shopping and trips out to the shops. It all adds up, and if you can save a few thousand a year by reviewing your household expenditure, you can put this towards your mortgage and pay it off sooner. 

A Home Loan Summary

This helpful article has shared five tips to help you pay off your mortgage faster. From making extra repayments to switching to fortnightly payments and utilising an offset account, follow these to shave years off your home loan. With these tips, you’ll be able to not only pay your mortgage off sooner, but perhaps even make sure that your household is in a strong financial position when it does come time to sell your property.