How to Pay Down Your Home Loan Sooner: Without the smoke and mirrors
If you’ve ever searched online for ways to pay off your mortgage faster, you’ve probably been hit with every “secret strategy” under the sun, from clever credit card tricks to refinancing hacks and repayment frequency myths.
The reality? There’s no holy grail, no magic formula that turns a 30-year mortgage into a 10-year one overnight.
What you’ll read here isn’t another sales pitch or overhyped gimmick, it’s a genuine look at the strategies that actually help you pay off your home sooner, and an honest review of the ones that sound impressive but don’t really move the needle.
Think of this as a grounded approach, facts - without anyone trying to sell you the holy grail.
The Starting Point: Discipline Is the Real Difference
Now, discipline is only one side of the equation. You might be incredibly disciplined, but if you simply don’t have much free cash flow left after bills, groceries, school fees and kids’ activities, that’s the reality for a lot of Australians right now.
And that’s okay. You might be in a stage of life where growing your family or covering education costs is your priority. There’ll come a time when those expenses ease or your income grows, and that’s when you can lean in harder.
But regardless of where you’re at, discipline needs to be backed by structure.
Step One: Get Structure Around Your Money
In my days of financial planning, this was always the starting point. If you don’t have a cash flow structure in place, you’re starting your financial journey with a blindfold on.
Here’s a simple framework that works:
Understand your expenses. Go back through 12 months of transactions. Capture everything, not just the obvious bills. EVERYTHING.
Trim the excess. Cancel direct debits you don’t need. Review your utilities and insurance if it’s been a while.
Separate essentials from discretionaries. Your essentials (like mortgage, groceries, petrol, insurances) should be automated. By this, I mean you can’t change it. You don’t need to ‘budget’ this - set this aside with a payment strategy. Then allow a small, controlled amount for personal spending, say $100 a week. This is your sole focus!
Stay consistent. The goal is to build awareness. Once you know where your money goes, you can decide what to do with it.
Once this structure is in place, you’ll know exactly how much surplus you can put toward your loan, and that’s when strategy comes into play.
Strategy 1: Make Your Offset Account Work Hard (if you have)
Your offset account is one of the most powerful tools for paying down your loan faster. Every dollar you hold in your offset account reduces the balance your lender charges interest on.
For example, if you have a $500,000 home loan and $20,000 in your offset, you’re only paying interest on $480,000. That means your repayments hit the principal faster — without locking your money away. How? Well your repayment stays the same, so your interest savings goes directly towards paying off your principal.
And look, I know there is a lot of chatter about offset accounts and blah blah blah. However, they are a great tool that can be used. When they aren’t so great? When you don’t use it!
People like this feature because it’s a separate fully transactional account. More flexibility and control for you.
Strategy 2: Use Redraw the Smart Way
A redraw facility can work in conjunction with your offset account, or you can opt for this as a standalone strategy. Some redraws have more functionality than others, but most lenders will automatically provide you with a redraw.
How it differs from an offset? A redraw facility is an inbuilt facility into your existing loan account. Let’s use the example above. If you have $20,000 that you pay as an additional repayment on your loan, this $20,000 will be ‘available’ for redraw.
Some lenders allow you to pay for bills from your redraw account, and the optimal strategy is to have your income paid into this account too.
Now, the interest offsetting effect actually happens the exact same way as the offset account. You still pay interest only on the difference (i.e. $480,000). The key reason why this can sometimes be a preferred method is because there is no fee to have this option, whereas, an offset account generally comes with a type of fee. This is usually because having an offset account has much more functionality.
How Much Difference Do Extra Repayments/Savings Really Make? (Strategy 1 & 2)
This is where the magic really happens.
Let’s use the same example — a $500,000 home loan at 5.50% interest over 30 years. If you simply stick to the minimum repayments, here’s what happens when you start adding a little extra towards the loan or offset each month:
| Extra Repayment | New Loan Term | Interest Paid | Interest Saved | Time Saved |
|---|---|---|---|---|
| None | 30 years | $522,020 | ___ | ___ |
| +$500/month | 21 years, 2 months | $346,599 | $175,421 | ≈ 9 years |
| +$1000/month | 16 years, 7 months | $262,861 | $259,159 | ≈ 13½ years |
Even an extra $500 per month — which is roughly the cost of a takeaway meal and a few streaming services each week — can save around $175,000 in interest and help you become debt-free nearly a decade sooner.
And if you can stretch that to $1,000 per month, you’re shaving off around 13 years and saving more than a quarter of a million dollars in interest.
That’s the power of consistent, structured discipline.
Strategy 3: The Credit Card Cashflow Hack (If You’re Disciplined)
Here’s where structure and discipline meet. If you’re confident in managing your spending, you can use a credit card for all your essential expenses (groceries, fuel, bills), while keeping your income sitting in the offset account (or redraw) as long as possible.
When your credit card repayment is due, which most credit card providers will provide you with a 55 day interest free period, you pay it off in full from your offset or redraw facility. Done right, this can shave thousands off your interest bill over time.
But and it’s a big but, this method only works if you never carry a balance. Interest on a credit card will undo all your hard work. So does being undisciplined.
The key to note here is that this is a long term strategy. See below:
How Much Difference Can It Really Make?
Let’s put some numbers around it.
Assume you have $5,000 in monthly expenses, a $500,000 home loan at 5.50%, and you use a credit card with a 55-day interest-free period to cover your regular spending.
By keeping that $5,000 sitting in your offset account for an extra 55 days each cycle, you’re effectively reducing your loan balance and saving interest before those funds leave your account.
Here’s what that looks like in real terms:
| Period |
Interest Saved (approx.) |
|---|---|
| 1 year | $500 |
| 5 years | $2,800 |
| 10 years | $6,500 |
| 20 years | $17,500 |
That’s over $17,000 in interest savings across 20 years, purely from using smarter cashflow timing, not extra repayments. Every bit of interest savings is great!
For context, if you look at the 5 year mark, you’ve saved approximately $2,800 in interest and you’ve paid approximately $132,000 in interest by this stage.
It helps, but you aren’t moving the dial as much as some of the magicians would have you believe.
Strategy 4: Consider Long-Term Wealth — Investment Property
This one might surprise you, but the best strategy to pay off your own home can sometimes be to buy another.
Historically, investment properties have generated equity far greater than what most people can save from cash flow alone. Over time, that equity can be used to reduce your home loan balance or bring you closer to being debt free against your primary residence.
It’s not for everyone — the property type, location, and structure matter — but it’s worth considering as part of a bigger financial plan if you have the capacity.
Does Paying Weekly Really Help?
Blake, you haven’t even addressed repayment frequency yet - is this even a legit blog? Well… There is a reason for this:
You’ll often hear advice to pay your mortgage weekly instead of monthly. Here’s the truth: it only helps if you don’t have an offset or use your redraw.
When you pay weekly, your lender typically divides your monthly repayment by four, but since there are 52 weeks in a year (not 48), you end up making the equivalent of an extra month’s repayment. That’s how it really works, it’s not frequency, it’s the extra repayments.
However, if you already have money sitting in your offset or you’re making additional repayments, the impact is the same. The key isn’t frequency, it’s total dollars paid off the balance (or put towards your offset).
What About True Weekly?
Well, what about true weekly payments (i.e. monthly repayment x 12 then divided up weekly)? That’s probably more shocking than what you would expect. Yes, making more frequent repayment does save on daily interest but by how much?
Using the example above, if you made true weekly repayments instead of monthly on a $500,000 loan at 5.5%, the total savings over 5 years would be roughly $58. Yes, $58! Not per month…in total. Worse, it’s approximately $306 over 20 years..
Look, it’s great to change frequency to match how you manage your finances, but you are not really going to move the dial on interest.
What Not to Do
Don’t Have Separate Savings
Don’t park spare cash in a separate savings account.
Why? Because even if your savings account earns 5%, you’ll likely net around 3% after tax, while you could be saving 5.5% interest on your home loan, and that’s tax free savings.
Don’t get me started on how this compounds over time.
Just don’t do it, unless you have an exceptional circumstance.
Other Debt vs Home Loan Debt
There is no point paying extra towards your home loan or putting money into an offset account, when you have a personal loan that you are paying 15% on. While you are saving some interest on your home loan, you are paying more on your personal debt. Focus on the higher interest debt first,then your home loan.
Why Refinancing Every 12–24 Months Isn’t Always the Answer
You might hear that refinancing every year or two is the best way to stay ahead on your mortgage rate. But here’s the truth, if you’re constantly refinancing every 12–24 months, chances are you’re just going around in circles.
Every refinance comes with costs. You’ll often pay for:
Mortgage registration fees
New lender setup or application costs
Discharge fees
Altogether, these can easily add up to $600–$1,100. In percentage terms, that’s often equivalent to about 0.10%–0.20% of your loan balance, meaning it can take two years just to break even on the interest savings.
Then what happens? You reach that two-year mark, refinance again, and restart the cycle.
A better approach is to find a competitive lender from the start and work with a good broker who keeps them honest, reviewing your loan each year and negotiating a sharper rate through pricing requests.
That way, you stay competitive without the churn, paperwork, and hidden costs that come from jumping lenders too often.
Final Thoughts
If you’ve read this far, you’re already doing better than most. You’re taking the time to understand the why behind the numbers, and that’s where real financial progress starts.
The truth is, there’s no one-size-fits-all strategy. But there are fundamentals that work every time: discipline, structure, and consistency.
From there, you can layer in smart tools, like offsets, redraws, and even property investment, to accelerate your progress.
The trick isn’t finding the next gimmick, it’s sticking to a plan you already know works.
If you want to strategise without the smoke and mirrors, just reach out! You can use the contact form, or book a meeting to chat through your goals and next steps.
