While most home loans run for 30 years, it is possible to become mortgage-free much sooner – even in as little as a decade.
The key is to embrace discipline, planning and the right loan structure.
If your goal is to pay off your home loan in just 10 years, here are some steps you can take.
Increase your repayments
The simplest way to shorten your loan term is to pay more than the minimum. Even a modest increase can make a significant difference over time, particularly at the beginning of your loan when most repayments go towards interest. Regularly rounding up your repayments or committing to a higher set amount can help accelerate progress.
Make lump-sum contributions
If you receive a tax refund, bonus or inheritance, consider putting some of it towards your home loan. Lump-sum payments directly reduce your outstanding balance, which lowers the interest charged and brings your loan end date closer.
Use an offset account
If your loan offers an offset account, keeping your savings in it can reduce the amount of interest you pay. Money sitting in an offset account effectively lowers your loan balance each day, helping you reduce your interest and shorten your loan term while still being accessible should you need it.
Switch to fortnightly repayments
Paying fortnightly instead of monthly means you make the equivalent of one extra monthly repayment each year. This simple change can shave years off your mortgage term and save a significant amount in interest over the life of your loan.
Review your loan regularly
Interest rates and loan products change over time. Reviewing your mortgage every two or three years – and refinancing if necessary – ensures you’re not paying more interest than you need to. A lower rate means more of your repayment goes towards the principal, helping you clear your loan sooner.
Understand the trade-offs
Paying off your mortgage early can provide peace of mind, reduce long-term interest costs and free up your income. However, there can be downsides too. You may miss out on higher-return investment opportunities or tie up money you might prefer to keep accessible. That’s why it’s important to speak to a financial professional to assess what is right for your unique circumstances.
If you’d like help structuring your home loan or exploring strategies to pay it off sooner, your Loan Market broker can review your lending options and help you choose an approach that works for you.
