How to pay off your mortgage faster (2024)

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Even little changes you make now to reduce your home loan interest can have a big impact on how much you end up saving on your mortgage – and the time it takes to pay it off. Find out how.

1. Make weekly or fortnightly repayments, instead of monthly

This is a good way to save on home loan interest with minimal effort.

Here’s the maths behind it. Interest is calculated daily and raised monthly on your due date every month. If you split your monthly repayments into two fortnightly repayments, or even four weekly repayments, you’re making repayments on your loan more frequently. This means the balance we calculate your interest on every day will be lower.

An added bonus for anyone who gets paid weekly or fortnightly is that your loan repayments can be more aligned to your pay cycle, which can help when budgeting.

Keep in mind that if you’re paying interest only on a Bankwest home loan, you can only make monthly repayments.

2.Use a mortgage offset account

An offset account is a bank account that’s linked to your home loan. You can use it like any normal transaction account, but the balance in it ‘offsets’ the amount you owe on your home loan. The interest you pay on your home loan is calculated on this reduced amount. The more you have in your offset account each day, the more interest you could save.

Some benefits of our offset accounts

  • You can link up to nine of them to a range of our home loans, which can help you manage your money
  • You can get a Platinum Debit Mastercard® with each offset account, so you can easily and regularly access your money.

Keep in mind

  • While no monthly offset fees apply if you have an eligible Complete Home Loan Package, they may apply to each offset account with our other home loans – be sure to check your home loan T&Cs.

See some tips to help you make the most of an offset account.

3.Make extra repayments

The more you pay off, the less interest we’ll charge on your home loan. Even if you make a small extra repayment to your loan every week, the savings can be huge. But don’t just take our word for it – crunch the numbers yourself on our home loan repayment calculator to see how much money and time you could save by paying more off your home loan.

What’s more, with a Bankwest home loan, you can access your extra repayments if you need money down the track– also known as redraw.

Some benefits of making extra repayments on our home loans

  • It could suit you better than using an offset account if you want to save on monthly offset fees that may apply depending on your home loan (for example, if you don't have an eligible Complete Home Loan Package)
  • You can make unlimited extra repayments with our variable rate home loans
  • With our variable rate loans, you can redraw through the Bankwest App, online banking, submitting a form online, sending a form to us by mail or fax, or by taking it to a branch.

Keep in mind

  • Our fixed rate loans let you make extra repayments up to a set amount each year
  • Redraw is not available while an account is on a Fixed Rate. This feature will be available once the Fixed Rate term ends. Eligible customers who receive a cashback payment into their Fixed Rate home loan account can access those funds upon request
  • An offset account might suit you better if you’d prefer to access your money more regularly
  • For loans requiring two or more people to authorise changes or payments, you won't be able to redraw through the Bankwest App or online banking
  • Redrawing your extra repayments means that that money will no longer be reducing the interest on your home loan.

4. Consider changing your loan conditions

Have a home loan health check

Things may have changed since you first opened your home loan, so reviewing it could mean you get a better interest rate, or more flexible features to help you save money long term. Our Home Lending Specialists mightbe able to help you out –find out more.

Consider splitting your loan

If you’re worried about fluctuating interest rates, you could choose to fix a portion of your home loan for an agreed term (of one to five years) while keeping the rest variable for extra flexibility. One great benefit of a fixed rate loan is that your repayments won’t change for the entirety of the fixed term, which could help you to budget.

Our Complete Fixed and Complete VariableHome Loan Packages let you split or switch between fixed and variable any time. Keep in mind that other fees and charges, such as break fees on a fixed rate loan, may apply.

OurHome Lending Specialistscan help you work out if splitting your loan is the right option for you.

About this article

We take care of all the BS (bank stuff) so you can access the knowledge you need to make informed decisions. When we write a guide or article, we take steps to make sure the information is relevant, accurate and most of all, helpful.

Keep reading

Consolidate debt to help pay your mortgage faster

If you’re juggling multiple debts, one way to simplify your finances is to bring all your loans together.

Learn more

Home loan redraw facility explained

Find out the ins and outs of redrawing your extra repayments.

Learn more

Home loan glossary

Common (but confusing) home loan and home buying terminology explained in plain English.

Learn more

Get in touch witha Home Lending Specialist, and they’ll respondwithin onebusiness day. You cantalk on the phone,meet at a branch, or have a MobileLendingManager come to you.​

Enquire now

How to pay off your mortgage faster (4) Find aMobile Lending Manager

How to pay off your mortgage faster (5) Call us on 1300 402 694

Lending and eligibility criteria, and fees and charges, apply for our home loans. The Complete Home Loan Package consists of an eligible home loan, one optional eligible credit card per customer and up to nine optional Offset Transaction Accounts per loan.

Consider the applicable product PDS available from Bankwest before deciding whether the product is right for you. Fees and charges may apply and subject to change.

Mastercard and the circles design are registered trademarks of Mastercard International Incorporated.

The information contained in this article is of a general nature and is not intended to be nor should it be considered as professional advice. You should not act on the basis of anything contained in this article without first obtaining specific professional advice. Also to the extent permitted by law, Bankwest, a division of Commonwealth Bank of Australia ABN 48 123 123 124 AFSL / Australian credit licence 234945, its related bodies corporate, employees and contractors accept no liability or responsibility to any persons for any loss which may be incurred or suffered as a result of acting on or refraining from acting as a result of anything contained in this article.

How to pay off your mortgage faster (2024)

FAQs

How to pay off your mortgage faster? ›

Making additional principal payments will shorten the length of your mortgage term and allow you to build equity faster. Because your balance is being paid down faster, you'll have fewer total payments to make, in-turn leading to more savings.

What's the fastest way to pay off a mortgage? ›

There's more than one way to pay down your mortgage early.
  1. Make Extra Mortgage Payments.
  2. Refinance at a Lower Interest Rate.
  3. Use Additional Income.
  4. Make Biweekly Payments.
  5. Seek Professional Advice.
Mar 26, 2024

How can I pay off my 30 year mortgage in 10 years? ›

Here are some ways you can pay off your mortgage faster:
  1. Refinance your mortgage. ...
  2. Make extra mortgage payments. ...
  3. Make one extra mortgage payment each year. ...
  4. Round up your mortgage payments. ...
  5. Try the dollar-a-month plan. ...
  6. Use unexpected income. ...
  7. Benefits of paying mortgage off early.

What happens if I pay 3 extra mortgage payments a year? ›

Making additional principal payments will shorten the length of your mortgage term and allow you to build equity faster. Because your balance is being paid down faster, you'll have fewer total payments to make, in-turn leading to more savings.

What is the 10 15 rule for mortgages? ›

The 10/15 rule is quite simple: if you can manage to pay an extra 10% of your monthly mortgage payment every week, you're on track to turn your 30-year mortgage into a 15-year one. For instance, if your monthly mortgage payment is $3,000, you'd pay an additional $300 each week directly toward your loan's principal.

What happens if I pay an extra $1000 a month on my mortgage? ›

When you pay extra on your principal balance, you reduce the amount of your loan and save money on interest. Keep in mind that you may pay for other costs in your monthly payment, such as homeowners' insurance, property taxes, and private mortgage insurance (PMI).

How to pay off a 300k mortgage in 5 years? ›

There are some easy steps to follow to make your mortgage disappear in five years or so.
  1. Setting a Target Date. ...
  2. Making a Higher Down Payment. ...
  3. Choosing a Shorter Home Loan Term. ...
  4. Making Larger or More Frequent Payments. ...
  5. Spending Less on Other Things. ...
  6. Increasing Income.

What happens if I pay an extra $200 a month on my mortgage? ›

If you pay $200 extra a month towards principal, you can cut your loan term by more than 8 years and reduce the interest paid by more than $44,000. Another way to pay down your mortgage in less time is to make half-monthly payments every 2 weeks, instead of 1 full monthly payment.

What happens if I pay an extra $500 a month on my mortgage? ›

Making extra payments of $500/month could save you $60,798 in interest over the life of the loan. You could own your house 13 years sooner than under your current payment.

Is there any downside to paying off your mortgage? ›

The Downside of Mortgage Prepayment

Prepaying your mortgage ties up your funds in your home, potentially leaving you with less liquidity for other financial needs or opportunities.

What happens if I pay an extra $3000 a month on my mortgage? ›

The additional amount will reduce the principal on your mortgage, as well as the total amount of interest you will pay, and the number of payments.

How many years will a 2 extra mortgage payment take off? ›

By making two additional principal payments each year, you'll pay off your loan significantly faster: Without extra payments: 30 years. With two extra payments per year: About 24 years and 7 months.

When should you not pay extra on a mortgage? ›

You have high-interest debt.

Rather than make extra payments toward your mortgage principal, consider paying down high-interest debt first. This can include credit card, student loan, medical, and car loan debt, just to name a few.

What is the golden rule of mortgage? ›

The 28% / 36% rule is based on two calculations: a front-end and back-end ratio. As we've discussed, this rule states that no more than 28% of the borrower's gross monthly income should be spent on housing costs – but it also states that no more than 36% should be spent on total debt costs.

What is the 50% rule for mortgages? ›

The 50% rule advises investors to estimate a property's operating expenses will amount to roughly half of its gross income. While this estimation proves helpful in projecting rental property cash flow, it is not a flawless measurement and should only ever be used as a starting point for further research and analysis.

Can you pay off a mortgage faster than 30 years? ›

Options to pay off your mortgage faster include:

Pay extra each month. Bi-weekly payments instead of monthly payments. Making one additional monthly payment each year. Refinance with a shorter-term mortgage.

Is it smart to pay off mortgage early? ›

Paying off your mortgage early can save you a lot of money in the long run. Even a small extra monthly payment can allow you to own your home sooner. Make sure you have an emergency fund before you put your money toward your loan.

How much does one extra payment a year reduce a 30 year mortgage? ›

That single extra annual payment will shave six years off your repayment term, so your home loan will be paid off in 24 years rather than 30.

What happens if I pay half my mortgage every two weeks? ›

A biweekly mortgage means that the borrower is paying every two weeks, or 26 half payments. The result is effectively 13 full payments over a 12-month period, accelerating the payoff of the loan. The extra payment per year can provide significant savings in total interest over the life of the loan.

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