How to pay off your mortgage faster

man at kitchen table paying bills

Nina Hendy

Posted May 17, 2022

Everyone wants to pay down their mortgage faster and be debt free. And while it sounds like an impossible dream, there are some steps you can take to reduce your debt faster.

Ready to commit to paying off your loan quicker, shaving years off your repayments in the process? It's easier than you might think thanks to these simple mortgage hacks.

Ways to pay off your mortgage faster

Start payments sooner

If you’re just settling on a loan, start making payments off your mortgage straight away, rather than waiting for the end of the first month. Think about it: your interest payments are calculated daily and charged monthly, so the lower your balance, the less interest you will pay. 

Renegotiate your home loan rate with your lender

Rates are still low by historical standards and there are plenty of low rates out there in the market, so use this to your advantage to secure the best rate that you can. So, if you see a lower interest rate being advertised with another lender, don’t be afraid to shop around. 

Start by approaching your lender first to try and renegotiate a lower rate, letting them know you’ve seen a better rate elsewhere. Consolidating other debts (like personal loans or credit cards) into a home loan when refinancing also enables you to access cheaper debt than these types of loans usually offer.

Pay more than the minimum loan repayment

Just because you’ve secured a lower rate, that doesn’t mean your mortgage is cheaper. Don’t reduce your repayments, keep slogging away at it with the same monthly repayment. Consistency is the key when it comes to reducing your mortgage.

Committing to making extra monthly payments (or paying more than the very minimum) isn’t easy. But if you make sure the mortgage payment comes out of your pay before it hits your account, you won’t have a chance to miss it. 

little boy running down stairs outside of family home

Consistency is key when it comes to paying off your mortgage faster.


Stick to a budget

Setting a budget can be the most challenging part of homeownership. The key is setting up an effective budget that gives you enough left over to cover other expenses and enjoy life, which often means regularly adjusting the numbers. 

Stashing an additional $100 every month into your mortgage adds up to $1,200 a year, which can reduce the term of your mortgage by a couple of years. And if interest rates do increase, be sure to re-work your budget and find that extra cash to reduce your repayments by the same amount as before.

Sell something

Selling unused items around the house can add up to thousands over the course of the year, so make the time for regular clear-outs, keeping an eye out for places to sell items like school uniforms that no longer fit, old bikes, tools, books, records or kids toys no longer being used. 

If you’ve got a collection of something that could be worth a few bucks, have it valued and consider cashing in and using the income to top up your mortgage. The same applies if you find yourself lucky enough to secure extra income, such as a cash gift for your birthday, a tax rebate or an inheritance.

Switch to solar energy

Making the commitment to switch to solar could save hundreds off your electricity bills, which you can put towards your home loan repayments. 

Currently, more than two million Australian homes have made the switch to solar. It’s a more sustainable option because electricity is generated by sunlight. A large system can produce an equal amount of power for household consumption and can be used by all electrical appliances in the home during the day, and store energy in a solar battery for the evening. Any extra power you produce, in some cases, can be sold back to the grid, further increasing your savings. 

Install costs depend on the size of your house, but basic systems cost from $2,000 after all the rebates, while the high specification systems are around $5,000 to $7,000 installed. Bigger is not necessarily better when it comes to solar systems, so speak to an experienced solar provider and settle on the right system for your current and future energy needs. 
Learn more about the benefits of solar here.

taking photos of car with mobile phone

Selling your second car can free up money to put to your mortgage.


Sell the second car (if you can)

Owning a car can cost you thousands of dollars a year, which is money you could be funnelling into your mortgage. 

Used car prices are at record levels. Selling your second car will enable you to put the sale price of the vehicle into your mortgage, plus maintenance and fuel savings, which is not insignificant. 

You can book a set of wheels when you really need to via a subscription or rental service.

Make bi-weekly payments

Lenders often set their customers up to make bi-weekly payments, but instead of making one monthly payment, consider making two smaller payments every fortnight.

With interest calculated and charged once a month, you’re beating the lender by paying in advance. There are 12 months in the year and 26 fortnights. By moving to fortnightly payments, you’re essentially creating an extra month in the year to pay off your mortgage.

Ask for help

If you’re struggling to keep up with your mortgage repayments, your lender’s hardship assistance team can help you manage difficult times.

Your lender may offer to defer your mortgage for several months, help you set a budget or establish a payment plan that works for you. It’s a good option to enable you to get on top of your finances again.

Get a side hustle

Consider whether you can make time to take on a part-time gig. There are plenty of platforms out there enabling you to find work, but be wary of getting ripped off because some of the rates can end up being low.

If you’re able to set yourself up as a contractor or freelancer that enables you to work on your own terms from home, you could potentially earn more.

Why not pick a few of these tips and try for yourself? These hacks add up quickly, enabling you to pay off your mortgage faster.

Buying or selling? RACV and its partners have a range of products to support your home buying or selling journey.
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