Is your home loan following you around like a ball and chain? If you’re keen to pay off your loan as soon as possible, we’ve got a few hints and tips to help you shave years off your mortgage.

1. Make fortnightly repayments

The default payment frequency for most mortgages is monthly. But did you know you could save time and money by halving those monthly repayments and making fortnightly repayments instead? Let’s take a look at how that works.

Let’s say that you have a $400,000 mortgage with an interest rate of 4% p.a. over 30 years. Your monthly repayments are $1,910 and in one year you’ll make $1,910 x 12 = $22,920 in repayments. If you were to halve your repayments and make them fortnightly, in one year you’ll make $955 x 26 = $24,830 in repayments. With fortnightly repayments, you’re basically making one extra monthly repayment every year, meaning you could pay off your mortgage 4 years and 1 month early and save over $45,000 in interest.

2. Make extra repayments

Whether you add a little bit extra to each repayment or you make a nice big deposit into your home loan, every little bit of extra cash helps.

Consider rounding up your repayments to the nearest hundred dollars. For example, if you have a $400,000 home loan with an interest rate of 4% p.a. and a loan term of 30 years, your monthly repayments are $1,910. If you round up your repayments to $2,000, you could pay off your home loan 2 years and 5 months earlier and save over $27,000 in interest.

Just make sure to check with your mortgage provider that there are no penalties or fees for making extra repayments.

3. Get an offset account

Many home loans that come with all the bells and whistles might have a feature called an offset account attached to the loan. An offset account is an everyday bank account that is linked to your mortgage. The benefit is that the balance in the offset account is deducted from your loan balance before interest is calculated. This means that you’re effectively using your own savings to reduce the interest that you pay on your mortgage which helps you repay your loan faster.

Let’s keep going with our example above. You have a $400,000 home loan, an interest rate of 4% p.a. and a loan term of 30 years. If you put $30,000 in your offset account at the start of your loan, you’ll only be charged interest on $370,000. This means you could pay off your mortgage 2 years and 8 months early and save over $29,000 in interest.

Keep an eye out on the type of offset account that your lender offers. There are two types:

1. 100% offset – the entire balance of your account is deducted from your loan balance before interest is calculated
2. Partial offset – a portion of your loan equal to the balance of your account is charged a reduced interest rate

4. Refinance (with care)

If your lender isn’t offering you a competitive deal, consider refinancing your mortgage.

Be careful when you’re refinancing. Ask your lender for an interest rate reduction while keeping your remaining loan term the same. If you switch to a new loan with a 30-year term, your repayments may look much lower, but you might actually be paying more in interest over the course of the new loan.

Before you get ahead of yourself, don’t forget to check with your lender to see if there are any penalties for repaying your loan early or switching or adjusting your mortgage terms. You don’t want to get caught out by any pesky fees.