To pay off your mortgage faster, switch to true fortnightly repayments, round your repayment up, keep your savings in a proper offset account, and keep paying the old amount when your rate drops. None of them needs a pay rise. On a typical loan, using all four together takes more than a decade off the term.
The reason it matters: on a $600,000 loan over 30 years at around 7.05% (the big banks’ average discounted owner-occupier variable rate, after the September rise), the minimum repayment is about $4,012 a month. Pay only that and you hand over roughly $844,000 in interest. That is more than you borrowed.
The four moves, side by side
All figures are for a $600,000 principal-and-interest loan, 30-year term, 7.05% variable, with the rate held steady for the life of the loan. They are illustrations, not quotes.
| Move | Interest paid | Interest saved | Loan paid off |
|---|---|---|---|
| Minimum monthly repayment | $844,000 | – | 30 years |
| Round up by $200 a month | $704,000 | $140,000 | 4 years 2 months early |
| Keep $30,000 in an offset account | $663,000 | $182,000 | 3 years 9 months early |
| Half the monthly repayment, paid fortnightly | $634,000 | $210,000 | 6 years 4 months early |
| Get 0.40% off the rate, keep paying $4,012 | $681,000 | $163,000 | 3 years 4 months early |
| All four together | $405,000 | $439,000 | 11 years 7 months early |
Pay off your mortgage faster
Total interest on a $600,000 loan, and how four moves cut it
1. Pay half your monthly repayment every fortnight
There are 26 fortnights in a year but only 12 months. Pay half your monthly amount every fortnight and you make the equivalent of 13 monthly repayments a year instead of 12, about $334 a month extra in this example, without feeling it much because it lines up with pay day.
The catch most people miss: some lenders set the fortnightly repayment by dividing the annual amount by 26, not by halving the monthly figure. That gives you no extra repayment at all. When you switch, ask for the fortnightly amount in dollars and check it is half the monthly one. If it is lower, ask to pay the higher amount anyway.
2. Round the repayment up
Minimum repayments are usually odd numbers. Rounding $4,012 up to $4,212 costs $200 a month and, in this example, saves around $140,000 and four years. Extra repayments on a variable loan generally go straight off the principal, and most variable loans let you redraw them if you need to (check your loan terms, and note that fixed-rate loans often cap extra repayments).
3. Use an offset account properly
A full offset account reduces the balance you are charged interest on, dollar for dollar. Keeping $30,000 there for the life of the loan, rather than in a separate savings account, saves about $182,000 here. And because you are saving interest rather than earning it, there is no tax on the benefit.
Two things to check. First, that it is a 100% offset, not a partial one, which is common on fixed-rate loans. Second, that your salary lands there and your spending comes out of it, so the balance works for you every day. For when an offset beats putting the same money in as an extra repayment, see offset account vs extra repayments.
4. When your rate drops, keep paying the old amount
Getting a better rate, whether by refinancing or asking your current lender for a discount, is only half the win. Take a 0.40% reduction and let the repayment fall, and you save about $58,000 over the loan. Keep paying the old $4,012 and the saving almost triples to around $163,000, with the loan gone more than three years early. You are already used to paying that amount, so it costs you nothing new.
Before you refinance, check the switching costs against the saving. The break-even maths is here, and this is what your bank weighs when you ask for a better rate.
What a lender would add
- Don’t strip your buffer. Money in an offset is still available. Money paid in as an extra repayment usually is too, through redraw, but lenders can change redraw terms. Keep a few months of expenses where you can reach them.
- Rates move. These figures hold the rate at 7.05% for 30 years, which won’t happen. The order of the savings holds, but the dollar amounts will shift with every RBA decision.
- Small and early beats big and late. An extra dollar in year one saves far more than an extra dollar in year twenty, because interest compounds on the whole balance in the early years.
Frequently asked questions
Do fortnightly repayments really pay off a mortgage faster?
Only if your fortnightly payment is half your monthly one. That gives 13 months’ worth of repayments a year. If your lender divides the annual amount by 26, you pay the same total and save almost nothing.
Is an offset account better than extra repayments?
They save the same interest dollar for dollar. An offset keeps the money easier to reach and doesn’t change your loan terms; extra repayments can be harder to get back if redraw is limited. Many borrowers do both.
How much faster can I pay off my mortgage?
In this example, rounding up alone saves about four years, and combining all four moves saves more than 11 years and about $439,000 in interest on a $600,000 loan.
How these figures were worked out: monthly or fortnightly compounding on a $600,000 principal-and-interest loan over 30 years at 7.05%, based on the RBA’s F5 lending rates (big banks’ discounted owner-occupier variable rate at 30 September 2026, plus the 0.25% September rise). The offset balance is held at $30,000 throughout. This is general information, not advice about your loan.
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Written by Michael Wignall, Lending Area Manager with 30+ years in banking and home lending across the ACT, Illawarra, and Riverina. Got a question or an idea for a post? Get in touch.
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