How To Pay Off Home Loan Faster: 14 Smart Tips (2026 Guide)

With many Australian homeowners adjusting to a higher interest rate environment, the goal remains the same: pay the bank less and keep more money in your pocket. While most Australians simply set and forget their 30-year mortgage, savvy homeowners are using smart debt structures to slash years off their term.

As an experienced mortgage broker in Brisbane, we have seen firsthand how these strategies work. In this guide, we reveal 14 proven strategies—from the ‘split loan’ trick to the ‘fortnightly hack’—to pay off your home loan faster.

Let’s dive in…

Let’s start by understanding how mortgage repayments are structured. Your mortgage payment isn’t just about paying back the loan. It’s split into two parts: the principal and the interest.

• Principal: This is the amount you borrowed – the actual loan balance.
• Interest: This is the cost of borrowing that money, paid to the lender.

When you take out your mortgage, your principal and interest are combined into one regular repayment.

For example, if you borrow $800,000 over 30 years at an interest rate of 6.67% p.a. (a typical owner-occupier variable rate in 2026), your principal & interest repayment would be roughly:

• About $5,150 per month (around $1,190 per week).

At the start of the loan, most of that $5,150 goes toward interest, not the principal. As time goes on and the balance falls, the interest charge each month gets smaller, so a larger share of your $5,150 goes toward paying down the principal.

In the first few years, only a small percentage of your repayments reduce the loan balance.
Using the $800,000, 6.67%, 30-year example:

• In Year 1, roughly 14% of your total repayments go to principal and 86% to interest. That’s about $8,660 toward principal and $53,100 in interest in the first 12 months.
• After 5 years, around 16–17% of your total payments so far have gone to principal. Over those first 5 years, you’d have paid roughly $49,700 toward principal and $259,000 in interest, leaving a balance of about $750,000.

Assuming interest rates stay the same, your monthly repayment stays at $5,150, but the mix gradually shifts: less interest, more principal.

When do you start paying more principal than interest?

On a 30-year loan at 6.67%, it typically takes many years before the principal portion of each payment exceeds the interest portion

For simplicity, the numbers above assume interest rates don’t change. In reality:

• If rates go up, your required repayment increases, but the pattern is similar: early payments are still mostly interest.
• If rates go down, you can often choose to keep paying the same amount. That extra money then goes straight to principal, helping you pay off the loan faster and save on interest.

That’s exactly what the rest of this article is about – keep reading to see specific strategies that can shave years off your loan and save you tens or even hundreds of thousands in interest.

Here’s the deal, before you can even think about paying your home loan off faster, you need to have a home loan type that will allow additional repayments. It’s important to be informed about the different types of loans available, as well as the pros and cons of each.

For example, a fixed-rate home loan only allows a maximum of $10,000 in extra repayments per year.

If you have committed to a long-term fixed rate, you may be stung with penalties as you can’t pay more than $10,000 in extra repayments per annum. This hinders your ability to pay off your loan faster.

This is a huge problem

Fortunately, there’s a simple solution…

A split rate home loan is a mortgage where one part of the loan has a fixed interest rate, and the other part has a variable interest rate. It gives you the flexibility to pay as much as you like off the variable part and have some certainty when it comes to the fixed loan.

For example, if you have a $800,000 loan, you can split it 50/50. This would mean you have $400,000 in variable and $400,000 fixed. You can split your loan any which way 90/10 or 70/30, or 50/50. The choice of how to split it is ultimately yours.  

Step-by-step process to split your home loan:

Read More: How to choose between variable or fixed rate home loans

This is a simple strategy that can literally cut $60,211 in additional interest from your loan:

An interest-only home loan allows you to pay only the interest on the loan for a specified time instead of paying both the principal and interest. This means you are not making any progress towards paying off the actual loan but only towards the interest. 

Although less common today, many lenders will offer the opportunity to pay interest only on a loan. 

Warning: Interest-only loans become very expensive in the long run. 

However, there can be certain times when an interest-only loan makes sense—like for constructing a property or even when buying an investment property. The benefits are that you have a lower repayment over the period of time that you’ve got the interest only repayment.

The downside is that it can cost you tens of thousands of dollars, and you won’t pay down any principal on your loan.

Paying principal and interest at the same time makes sure you can get your loan cleared, reducing the effects of compounding interest and repaying your loan much faster.

As Albert Einstein said, “compound interest is the eighth wonder of the world. He who understands it earns it … he who doesn’t… pays it. Compound interest is the most powerful force in the universe.”

1. Start with your actual loan details 

For example

2. Choose a “stress test” rate

Pick a higher rate that you could still comfortably afford — for example, 8.67% p.a.

This is not a prediction that rates will rise to 8.67%. Instead, it’s a budgeting strategy that helps you prepare for potential rate increases while paying down your loan faster

3. Calculate the repayment at the higher rate

Using the ASIC MoneySmart mortgage calculator (or your lender’s calculator):

4. Pay the higher amount every month

Another benefit of this approach is that you’re already used to making larger repayments. If interest rates increase in the future, the higher repayment is less likely to put pressure on your budget because you’ve already built the habit. 

If rates stay the same or fall, continuing to make the higher repayment allows you to pay your home loan off even faster.

Paying an extra $1,000 a month on an $800,000, 30-year loan at 6.67% could:

Instead of paying back well over $1.8 million to the bank over 30 years (around $800,000 in principal plus more than $1 million in interest), you could be looking at repaying closer to $1.4–1.5 million in total.

The principal you borrow remains the same, but you’re knocking it down much faster, which means there’s far less interest to pay.

The extra $1,000 a month goes straight to reducing your principal. So in the early years, instead of only a small portion of your repayment reducing the loan balance, a much larger share goes towards paying down the debt. Because of how compound interest works, the effects multiply over time.

By the 5-year mark, a significantly higher percentage of each payment is going towards principal compared with making only the minimum repayment.

In other words, any extra money you put towards your home loan will save you a lot in the long run.

We’ve crunched the numbers, looked at the scenarios, and seen the undeniable impact extra payments can make on your mortgage. Even an extra little bit each month can make a big difference to the interest you pay over the life of the loan – not to mention cutting down the time it takes to pay it off.

Finding that extra cash can be a challenge with today’s cost of living, but the potential savings are too big to ignore.

Whether it’s an extra $100, $500, or $1,000 each month, every bit helps chip away at your principal faster, saving you tens – if not hundreds – of thousands of dollars over the life of your loan.

It’s no secret that 100% offset accounts are the best way to pay off your home loan faster.

An offset account is similar to your regular savings or transaction account. It works by only charging you interest on the balance of your home loan minus any money you have in the offset account. Put simply, an offset home loan account allows you to pay off your loan quicker by reducing your interest payments.

You can deposit your pay, gifts, bonuses, and tax refunds into your offset account. Every dollar in the offset account is reducing your home loan balance.

That said, there are still heaps of people who do not fully take advantage of a 100% offset.

As you can see in the example above, every dollar in the offset reduces how much interest is paid on your home loan.

Not everyone wants to pay the annual “Package Fee” (often around $395) that usually comes with an offset account.

If you are fee-conscious, there is a powerful alternative: The Redraw Facility.

Think of redraw as the “poor man’s offset.” It achieves the exact same interest savings but is often available on basic, low-fee loans.

How it works:

Instead of putting your savings into a separate account linked to the mortgage, you put your extra money directly into the home loan. Just like an offset, this lowers your loan balance, meaning you get charged less interest.

The Catch:

There are two main differences to be aware of:

The Verdict:
If you are a disciplined saver who doesn’t need instant access to your cash and you hate paying annual bank fees, using your redraw facility is a fantastic way to smash your mortgage interest for free.
If you aren’t using an offset account, contact your mortgage broker today to look at switching your home loan type or at least check if you have a redraw facility available.

Read More: Home loan features – what to choose and what to avoid

As the saying goes, ‘money is a cruel master but an excellent servant.’ Make your money work for you to its maximum capacity by doing a budget.

Having a budget in order is essential for achieving your financial goals. A budget helps you stay on top of your expenses, so you can use the ‘extra’ money you save to pay down your loan faster.

Half the battle with budgeting is just being aware of what you are spending. 

There are many ways you can do this. One of the best ways is to use a budgeting app. Many apps are available, so you can choose the one that suits your needs best. 

All you need to do is:

Read More: 11 Hidden Costs of Buying a Home in Brisbane

Some banks offer great interest rates for new clients but do not extend these lower rates to existing customers. So if you have been with the same bank for some time, you might be paying a higher interest rate! You can refinance by moving to another lender or refinancing with the existing lender.

Refinancing your loan can cut your interest costs by THOUSANDS.

Does this mean you should go out and refinance your home loan today? No.

Instead, we recommend talking to your mortgage broker to see what deals are available or if your existing bank is willing to reduce your current interest rate.

This strategy works so well that even a small reduction of 0.75% can pay off your home loan 39 months earlier. That’s almost 4 years!!!!!

There are also some banks that offer rebates and cover the fees for switching your home loan.

Read More: 7 reasons to refinance your home loan

Here is a hard truth: Being loyal to your bank often doesn’t pay. In fact, it usually costs you money.

We call this the “Loyalty Tax.”

It happens when lenders offer incredible, rock-bottom interest rates to new customers (the “front book”) to get them in the door, while leaving existing customers (the “back book”)—that’s you—on older, higher rates.

Basically, the longer you stay with your bank without asking for a better deal, the more likely you are to be overpaying.

Recent data suggests the gap between what new customers pay and what existing loyal customers pay can be as high as 0.50% to 1.00%.

On a $800,000 mortgage, a 1% difference is an extra $8,000 a year you are donating to the bank simply because you haven’t made a phone call. That is money that should be paying down your principal!

So, how do you fix it without the hassle of refinancing?

You use the “Discharge Form” strategy.

Most people call their bank and just ask for a lower rate. The bank usually says “no” or offers a tiny discount.

Instead, call your bank and ask for a Discharge Form so you can move your loan to another lender.

This is the magic trigger.

Asking for this form often escalates your call immediately to the bank’s “Retention Team.” These guys have the authority to offer much bigger discounts than the standard customer service rep because their only job is to stop you from leaving.

Often, they will match or beat a competitor’s offer on the spot just to keep your business.

Read More: Nine reasons to refinance your home loan

One simple way to make extra progress on your mortgage is to switch from monthly repayments to fortnightly repayments.

Instead of making one monthly repayment, you divide your monthly repayment amount by two and pay that amount every fortnight.

For example:

Let’s assume your minimum monthly repayment is $1,000.

Instead of paying:

Because there are 26 fortnights in a year, you make the equivalent of 13 monthly repayments instead of 12. That means you are effectively making one extra monthly repayment each year without making a large additional payment.

Over time, these extra repayments reduce your loan balance faster, meaning you pay less interest and can shorten your mortgage term.

On a typical 30-year home loan, switching to fortnightly repayments can help reduce your loan term by around 5 years and 8 months, depending on your loan amount, interest rate and repayment structure.

The benefit of this strategy is that the extra repayment is spread throughout the year, making it easier to manage while steadily reducing your mortgage balance.

Here’s the truth: if you want to get a home loan, you will have to pay some bank fees, and they can add up to $500–$600 (or more) per application. These include:

With that being said, the most expensive fee you can pay when getting a loan is Lenders Mortgage Insurance (LMI).

Lenders Mortgage Insurance is a one-off insurance premium that protects the bank (not you) if you default on your loan. It’s usually paid when your loan settles, and sometimes it can be added (or “capitalised”) to your loan.

Over 30 years, that extra $15,000 can:

• Cost you an additional ~$19,700 in interest, and
• Make the total cost of that LMI closer to $34,700 when you include both the premium and the extra interest.

People often choose the biggest banks because they feel more secure dealing with a household name. One common misconception is that choosing a smaller lender means sacrificing security

Many smaller banks, building societies and credit unions are Authorised Deposit-taking Institutions (ADIs), which means eligible deposits are protected under the Australian Government’s Financial Claims Scheme (FCS).

The FCS protects eligible deposits up to $250,000 per account holder per ADI if an authorised deposit-taking institution fails.

What does that mean for you as a borrower? It means you can consider a wider range of lenders without automatically assuming that only the major banks are reliable. Smaller ADIs can provide competitive home loans while still operating under Australia’s financial regulatory framework.

Smaller lenders often need to compete with the major banks to attract customers, which can mean they offer sharper interest rates, flexible loan features or more personalised service.

Read More: Ethical banks in Australia.

So you have paid down a big chunk of your home loan. Now what?

It’s time to think about investing.

Keep in mind that investing can be very risky. You should always talk to a professional like a financial adviser first.

If you want to invest in property, consider Rentvesting. Rentvesting is living where you want and investing where you can afford.

Alternatively, you can invest in shares. There are lots of different ways to invest in shares:

Read More: How to go from Zero to 3 Properties in 3 Years

If you are uncertain about how to go about any of the steps we mentioned above, then you can contact an expert mortgage broker who will sit down with you and give you the best option that works for you. At Hunter Galloway, we have helped our clients to refinance and get the home loan that suits their financial goals

If you are looking for the best home loan in Brisbane or want to buy a home or refinance, speak with one of our experienced mortgage brokers to walk through the next steps with you.

At Hunter Galloway, we help clients get the best Home Loans in Brisbane in this competitive market. We give you the strategies that have helped other home buyers like you secure a property when there have been 5 other offers on the table!

 Enquire online or give us a call on 1300 088 065.

This is a strategy we call “Forced Discipline.”

Here is the common trap we see all the time: A homeowner decides to refinance to get a better interest rate. They’ve already been paying their mortgage for 5 years, but when they switch banks, they reset their loan term back to 30 years to get the lowest possible monthly repayment.

Warning: While your monthly repayment drops, you have just extended your debt sentence! You are now paying off your house over 35 years instead of 30.

Sure, you might tell yourself, “I’ll just pay the extra money voluntarily.”

But let’s be real—life happens. The car breaks down, the kids need braces, or you just want a holiday. When the extra repayment is voluntary, it’s the first thing to get cut when the budget gets tight.

So, here is the strategy:

When you refinance, don’t take the standard 30-year term. Instead, ask your mortgage broker to set the loan term to 25 years or even 20 years.

By contractually shortening the loan, you are “locking in” a higher repayment. You can’t slack off because the bank requires that higher amount every month.

It forces you to maintain your momentum.

Yes, your committed monthly expense will be higher than if you took the 30-year option, but the result is guaranteed. You will be mortgage-free by that specific date, and you will save tens of thousands in interest that would have otherwise gone to the bank during those “reset” years.

Read more: Home loan extra repayment calculator