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Paying off your home loan faster doesn’t just provide the security of owning your property outright sooner – it can also be a lucrative wealth-building strategy. The calculus behind this is simple: by reducing your mortgage term you’ll pay less interest, which in turn frees up cash flow for other wealth-generating opportunities.

So, how can you pay off your home loan faster and, at the same time, grow your wealth?

In this article, I’ll outline several strategies to help you achieve this:

1. Strategy: Make extra repayments
2. Strategy: Set Up a weekly or fortnightly repayment schedule
3. Strategy: Use an offset account
4. Strategy: Increase your regular repayment amount
5. Strategy: Use your bonuses or tax refunds
6. Strategy: Refinance to a lower interest rate
7. Strategy: Avoid taking on additional debt
8. Strategy: Consider a negatively geared investment property
9. Accelerate your mortgage payoff with expert guidance

Strategy: Make extra repayments

One of the most effective ways to pay off your home loan faster is by making extra repayments. Even small additional payments can have a significant impact over time, reducing the principal amount on which interest is calculated. This can shorten your loan term and save you thousands in interest.

If your lender allows, making lump-sum payments whenever possible, such as after receiving a bonus or tax refund, can further speed up the process.

Before you implement this strategy, check whether your loan has any restrictions or fees for early repayments.

Strategy: Set Up a weekly or fortnightly repayment schedule

Switching to a weekly or fortnightly repayment schedule can help you pay off your home loan faster without feeling the financial strain of larger repayments. Most lenders calculate interest on a daily basis, so the more frequently you make payments, the less interest will accrue.

By making repayments every week or two weeks, you effectively end up paying more over the course of the year compared to monthly repayments. This small adjustment can lead to significant interest savings and a shorter loan term.

Strategy: Use an offset account

An offset account is a savings or transaction account linked to your home loan. The balance in this account offsets your loan balance, meaning you only pay interest on the difference between the two.

For example, if you have a $400,000 mortgage and $50,000 in your offset account, you will only be charged interest on $350,000. By keeping as much money as possible in your offset account, such as your salary or savings, you can reduce the amount of interest charged, helping you pay off your loan faster.

Strategy: Increase your regular repayment amount

Even a slight increase beyond your minimum required payment can make a significant difference over time. By paying more than the scheduled amount, you reduce the principal balance faster, which in turn reduces the interest you’re charged.

This approach can help shorten your loan’s term and potentially save you a substantial amount in interest.

Before you implement this strategy, check whether your loan has any restrictions or fees for early repayments.

Strategy: Use your bonuses or tax refunds

Use windfalls like bonuses, tax refunds, or any unexpected extra income to make lump-sum repayments. By applying these extra funds directly to your mortgage, you reduce the principal faster, leading to lower interest payments over time.

This approach can shorten your loan’s term without affecting your regular budget.

Again, before you implement this strategy, check whether your loan has any restrictions or fees for early repayments.

Strategy: Refinance to a lower interest rate

Refinancing your home loan to a lower interest rate can be a powerful way to pay off your mortgage faster. By securing a lower rate, more of your repayments will go towards reducing the principal rather than paying interest.

Over time, this can significantly reduce the total cost of the loan and shorten the repayment period. It’s important to regularly compare home loan rates to ensure you’re getting the best deal. Before refinancing, consider any associated fees or charges and weigh them against the potential savings to ensure it’s a financially sound decision.

If you’d like some help with this strategy, reach out to us for a Finance Strategy Session. We’ll give you some exciting options for refinancing your loan onto a more attractive rate.

Strategy: Avoid taking on additional debt

Taking on extra debt while paying off your home loan can slow down your progress and increase your financial burden. New debts, such as personal loans, car loans, or credit card balances, come with additional interest and repayments, diverting funds away from your mortgage.

By minimising or avoiding new debt, you can focus more on repaying your home loan faster. It’s also important to maintain a disciplined approach to spending and resist the temptation to take on unnecessary financial commitments that could delay your goal of owning your home outright.

Strategy: Consider a negatively geared investment property

Investing in a negatively geared property can be a strategy to help pay off your home loan faster, particularly if you’re motivated to grow their wealth. Negative gearing occurs when the cost of owning an investment property—such as interest repayments and maintenance—exceeds the rental income it generates, leading to a loss. This loss can be used to reduce your taxable income, potentially increasing your tax refund.

The savings from tax benefits and any long-term capital growth of the property can then be redirected to paying off your home loan faster. However, this strategy involves risk and careful consideration of your financial situation, so it’s advisable to seek professional advice before proceeding.

Accelerate your mortgage payoff with expert guidance

Paying off your home loan faster is a great way to build wealth, but navigating the right strategies can be challenging. With so many options—whether it’s making extra repayments, setting up an offset account, or refinancing—having expert advice can make a significant difference in achieving your goals sooner.

If you’d like tailored guidance on these strategies, consider a Free 30-Minute Finance Strategy Session with Trilogy Funding, where you will:

• Explore personalised repayment strategies that can help reduce your mortgage term and interest costs.
• Gain insights into current interest rates, loan conditions, and refinancing options that suit your financial situation.
• Learn how to effectively use tools like offset accounts and bonuses to accelerate your mortgage repayment.
• Understand how your financial position can be leveraged to make your home loan work harder for you.
• And more.

This no-obligation free session will be held with one of our experienced mortgage brokers.

Please be assured this will not be a thinly disguised sales presentation. On the contrary, you’ll receive our best strategic advice, specific to your situation, so you too can accumulate multiple properties without sacrificing your current lifestyle and accelerate your progress towards wealth.

Schedule Your FREE 30-Minute Finance Strategy Session Today

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Please note, the numbers and assumptions listed in this article are for educational purposes only. Individuals should seek specific advice pertaining to their unique situation and the real estate market before making any decisions.

Trilogy Funding Two is a corporate credit representative (Representative Number 506131) of BLSSA Pty Ltd, ACN 117 651 760 (Australian Credit Licence 391237)