Pay Off Your Loan 8 Years Earlier: 5 Things Most People Skip

“Is there a way to pay off my home loan faster?” A client asked this last week. She’d been making repayments on time for five years, never missed one, but had no idea that a few small changes could cut years off her loan without touching her take-home income. Here’s what we told her.

1. Switch to fortnightly repayments

Fortnightly repayments mean 26 payments a year, not 24. A monthly schedule gives you 12 cycles; fortnightly gives you 26, which works out to one extra monthly payment going straight to your principal every year.

On a $1M loan at 6% over 30 years, this one change alone gets you to paid off in about 24.5 years, that’s 5.5 years of interest you never pay. It takes a 10-minute phone call to set up.

2. Review your interest rate. Your bank won’t do it for you.

Once you’ve paid down some principal, or your property has gone up in value, your LVR has likely dropped. Lower LVR means less risk for the bank, which often means you’re eligible for a better rate. They won’t call you to tell you that, you have to ask.

Every 6 to 12 months, call your bank and request a rate review, then check what competitors are offering. You don’t have to refinance every time, but you should know if you’re paying above market.

3. Unlock the full potential of your offset account

Most people have one. Most people treat it like a savings account and leave it there. The right move: salary goes in, daily expenses go on a credit card, card gets cleared in full before the due date. Every dollar sitting in offset is a dollar your bank isn’t charging interest on.

4. Put unexpected income straight to principal

Tax return, bonus, the instinct is to spend it, but the earlier you put it against your loan, the more it’s worth. An extra $10,000 in year one saves roughly $45,000 in total interest and cuts about 9 months off your loan.

5. When rates drop, don’t drop your repayments

If your minimum repayment falls from $6,000 to $5,600, most people pocket the $400 and move on. Keep paying $6,000. That extra $400 goes straight to principal, not to the bank. Your lifestyle doesn’t change, but your loan term shrinks.

None of this requires refinancing or a higher income. It’s about not leaving your loan on default settings.

This email contains general information only and does not constitute financial, legal or investment advice. Past performance is not a guarantee of future results. Always seek advice from qualified professionals before making investment decisions.