How to pay off your home loan faster - NAB
What speeds up your home loan
Paying off your home loan faster usually comes down to three things: paying more money off the loan, reducing the interest you're charged, and making the most of your loan's features. Small, consistent changes like switching to fortnightly repayments or keeping extra cash in an offset account may shave years and thousands of dollars off your loan, without needing a big jump in income.
There's no single timeframe that works for everyone. How fast you can pay off your loan depends on your loan size, your interest rate, and how much extra you're able to put in. The tips in this article can help, whatever your target.
Ways to help pay off your home loan faster
Every extra dollar you put into your home loan works harder, because it reduces the balance that interest is calculated on, for the rest of the loan. Here are some practical ways to make that happen.
Make additional repayments
If your loan allows it, paying more than the minimum amount, even by a small, regular amount reduces your principal faster and cuts the total interest you pay over the life of the loan. Lump sums like a tax return, bonus or gift are also worth putting towards your loan. Always remember to check whether there's a cap on extra repayments.
Use an offset account
An offset account is a transaction account linked to your variable rate home loan. Its balance is offset against your loan balance each day before interest is calculated, so the more you keep in it, the less interest you pay.
Make more frequent repayments
Switching from monthly to fortnightly repayments can mean you end up making the equivalent of one extra month's repayment every year, because there are 26 fortnights but only 12 months. It's a small shift in habit that adds up to real savings over the life of a loan.
Choose a loan with flexibility for extra repayments
Not all home loans let you pay more than the minimum without a fee, and some cap how much extra you can pay each year. If paying off your loan faster is a priority, check whether your current loan or one you're considering allows flexible extra repayments.
Review your home loan regularly
Interest rates, loan features and your own circumstances can change over time. Checking in on your home loan every year or two, comparing your rate, fees and features against what's currently available can help you spot opportunities to save, whether that's negotiating a better rate or switching to a loan that suits you better.
What paying off your loan faster can look like
Everyone's situation is different, but these examples show how the habits we’ve shared can play out in real life.
- The extra-repayment saver: Rounds up their monthly repayment and redirects birthday money and tax refunds straight into the loan, chipping away at the principal a little at a time.
- The offset maximiser: Keeps their everyday savings and salary sitting in an offset account instead of a separate savings account, so their cash works double duty.
- The frequency switcher: Moves from monthly to fortnightly repayments and barely notices the difference in their budget but ends up making an extra repayment each year.
- The rate reviewer: Sets a reminder to check their rate against the market every year, and either negotiates with their lender or refinances when a better deal makes sense.
Want to see what any of these could mean for your own loan? Try the numbers in our home loan repayment calculator.
Things to consider before increasing your repayments
Putting extra money into your home loan is worth thinking through first. A few things to weigh up:
- Do you have enough set aside for emergencies? Redraw isn't always instant, so it shouldn't replace a rainy-day fund.
- Is your loan fixed or variable? Fixed rate loans often cap extra repayments or charge a break fee if you exceed the limit.
- Are there other financial goals competing for the same dollars, like paying down higher-interest debt or building your super?
- Will locking in extra repayments affect how easily you can access that money later if your circumstances change?
There's no universally right answer here. It comes down to your own goals and financial position.
Frequently asked questions
-
It's possible for some borrowers but may not be realistic for everyone. Paying off a typical home loan in 10 years usually means having a smaller loan balance relative to income, a competitive interest rate, and the ability to consistently pay well above the minimum repayment, often more than double it.
The right timeframe for you will depend on your income, expenses, and life stage. Rather than fixating on a set number of years, it's often more useful to focus on the habits that speed up repayment and see how far they take you.
-
It depends on your loan. Many variable rate home loans allow unlimited extra repayments, while fixed rate loans often cap how much extra you can pay each year before additional fees apply. Check your loan contract or ask your lender directly.
-
Once your home loan is paid off, your lender will close the loan account and, if applicable, arrange for the mortgage to be discharged from your property title. A small loan discharge fee may apply. After that, you're free to redirect your former repayments towards other goals, like saving or investing.
Other approaches people consider
Some borrowers explore more advanced strategies to manage debt and build wealth at the same time. Debt recycling is one example. It involves using the equity in your home to invest, potentially claiming the investment loan interest as a tax deduction, and using any returns to help pay down your home loan faster. These strategies carry more risk and complexity, so they're worth discussing with a financial adviser or tax professional before you get started.
Get financial advice
Have confidence in your future with help from a financial adviser.
Explore other life moments
Keep your home loan working for you
Check your home loan, refinance when needed and organise money with offset buckets to stay in control all year.
The principles behind smart borrowing to invest
A team of experts discuss the benefits and risks of borrowing to invest in assets.
Home loan redraw
Discover how redraw works, check eligibility criteria and learn how building redraw could benefit you.
Related products and services
Online investing - nabtrade , opens in new window
Be a better investor with NAB trade. With a range of research and tools we give you the confidence to find your next investment opportunity and grow your wealth.
NAB Term Deposit
With a competitive interest rate for a term that suits you, our term deposits can help you reach your savings goals.
Financial advice
Get in touch with us to talk about financial advice options, including personal insurances, investments, super or retiring planning.
Contact us for home loan related queries
This is how you can get in touch.
Start a conversation with a banker
- Log into either NAB Internet Banking or the NAB app.
- Tap on the message icon.
- Type ‘speak to a person’ in the conversation window.
Call us
Speak to a home loan expert about a new or existing home loan.
Monday to Friday, 8:00am to 7:00pm (AEST/AEDT)
Saturday to Sunday, 9:00am to 6:00pm (AEST/AEDT)
Book an appointment
Make an appointment to see us at your nearest branch, ask a mobile banker to come to you or ask us to call you back.
Important information
Apologies but the Important Information section you are trying to view is not displaying properly at the moment. Please refresh the page or try again later.
Only eligible NAB Home Loans can benefit from an interest offset arrangement including the NAB Tailored Variable Rate Home Loan. For example, Fixed Rate Home Loans and Base Variable Rate Home Loans with NAB do not benefit from an interest offset arrangement. The potential benefits you could gain from using a NAB offset facility will depend on many factors including the amount of funds in your offset account and how long the funds are in your offset account. You will not earn interest on the account balance of your transaction account whilst it is linked to a home loan under an interest offset arrangement. A NAB Classic Banking account can be used as an offset account.
The information contained in this article is intended to be of a general nature only. It has been prepared without taking into account any person’s objectives, financial situation or needs. Before acting on this information, NAB recommends that you consider whether it is appropriate for your circumstances. NAB recommends that you seek independent legal, financial and taxation advice before acting on any information in this article.
Target Market Determinations for these products are available at nab.com.au/TMD.