Simple ways to increase loan repayments


Paying off your mortgage can seem like a never-ending story – every payment counts of course, but it can feel like an endless battle to make a dent. Therefore, you may be thinking about how you can pay off your home loan sooner to reach your home ownership goal. Here are some simple approaches to increase the amount you pay off your mortgage and own your home sooner rather than later.

Lowering the principal on your home loan as quickly as possible would see you paying less interest over the life of the loan. With this in mind, making additional repayments on your home loan is another way to lower the length of the loan and save on interest. To find the ideal balance between extra repayments you can afford to make, and the time this will shave off your mortgage term, you can use a mortgage calculator.

For example, on a $500,000 loan and a monthly repayment of $2533 will see a total loan term of 30 years and a total cost of just over $912,000. However, by paying an additional $550 per month on top of your monthly repayment, that will bring the loan term down to just over 20 years and have a total cost of just over $772,000. That’s a saving of $140,000 of interest over the life of the loan.*

Ignore the bank
Well, sort of. Your home loan has a minimum monthly repayment set by the bank, however, by making additional payments, you can significantly lower your mortgage and overall interest. Sit down and work out your budget, which will help you figure out the most you can afford, think of this as your minimum repayment. Budget for it and stick to it.

Repayment frequency
Consider making weekly or fortnightly repayments. As there are 26 fortnights in a year, paying fortnightly repayments allows you to squeeze in the equivalent of an additional month.

For example, a loan of $500,000 over 30 years would have a monthly repayment of roughly $2533. By paying $1266 fortnightly, you could save over four years on your loan, as well as $70,084 in interest over the life of the loan.*

Treat yourself
Think of every step you take towards reaching your goal of owning your property outright as a way of rewarding yourself. Sure, a fancy bottle of wine is nice, but doesn’t reducing a year off your loan taste pretty sweet, too? Each time your income increases, no matter the amount, you should funnel additional funds into the debts that have the highest interest. If this is your home loan, send it there. Also, once you receive your tax return, any bonuses at work or even cash gifts, put these funds straight onto your loan.

Track your spending
Most banks will track your spending for you in your internet banking, however, if you can’t seem to find a money tracker, there are plenty of apps that track where your money is going. Once you have an understanding of what you are spending your money on, you can trim where necessary, channelling any savings into your mortgage payments.

Eyes on the prize
Keep an eye on the forecast term on your mortgage. Watching your loan decrease will motivate you to work even harder.

Talk to us
Talking to us about refinancing options could reveal a way to pay down your debt sooner even without increasing repayments. We can look into whether you may get a better interest rate or lower fees with another bank, or even with your own, and will be able to help minimise any refinancing costs

Reviewing your loans is important each time you have a change in your financial circumstances or personal goals. If you are making more income than when the loan originated, you have cleared any unsecured debt since that time, or your property’s value has risen, we may be able to arrange a far better arrangement than the one you are currently on.


*Calculations based on a $500,000 loan over 30 years with an interest rate of 4.50%. This calculation is indicative only and is subject to change.

All care was taken in writing this article with accuracy. All content is accurate at the time of writing this post and is subject to change. If you have any questions, please contact us.

[Image from Three Birds Renovations.]