▶ Watch the video, Part 1 (the strategy): https://www.facebook.com/reel/891400866944176/
▶ Watch the video, Part 2 (steps 2 and 3): https://www.facebook.com/reel/1431717718592831/
In February, Marty released a two-part video series on reducing the life of your home loan. In Part 1, he broke down a strategy that he says people often pay to learn, and he shared it for free. Part 2 covered steps 2 and 3, which Marty described as “nothing fancy. Just real, practical moves.” For the exact steps in his words, watch both videos.
This article doesn’t replace the videos. Instead, it covers the general principles that usually sit behind paying a mortgage off sooner, so you can see how the pieces fit together.
Why small changes add up
On a standard principal-and-interest home loan, interest is generally calculated on the outstanding balance each day. Anything that brings that balance down sooner, or keeps it lower for longer, means less interest builds up. Because the loan runs for decades, small and consistent changes can add up over time.
Common approaches borrowers use
1. Make extra repayments
Paying more than the minimum, even a modest amount, goes straight to reducing your principal on most variable loans. Fixed-rate loans often cap how much extra you can pay without a penalty, so check your loan terms first.
2. Consider repayment frequency
Some borrowers switch from monthly to fortnightly repayments of half the monthly amount. There are 26 fortnights in a year, so that works out to roughly one extra monthly repayment each year. Not every lender calculates fortnightly repayments this way, so it’s worth confirming how yours does.
3. Put your savings to work
An offset account or redraw facility can let your savings reduce the interest charged on your loan while still giving you access to the money. Whether this works in your favour depends on your balance and any extra costs. We’ve covered this in our offset accounts article.
4. Keep repayments steady when rates fall
If your rate drops and your minimum repayment comes down with it, you can keep paying the old amount. The difference then goes toward principal, and your budget stays the same.
5. Review your rate regularly
Lenders often price new customers differently from existing ones. A regular review of your rate, and a conversation with your lender, can help make sure you aren’t paying more than you need to.
6. Be careful when refinancing
If you refinance, think about the loan term. Starting a fresh 30-year term can undo years of progress. See our article Before You Refinance.
Applying it properly
As Marty points out, these moves can potentially shave years off a mortgage if applied properly. The results depend on your loan, your rate, your income, your discipline and your goals. There are also trade-offs. Money you put into your home loan might be needed for an emergency fund, super, or other debts with a higher interest rate.
Talk it through
If you’d like help working out which approaches suit your loan, our team is happy to talk it through with you, with no pressure and in plain English.
This is general information only and does not take into account your objectives, financial situation or needs. Speak to a broker before acting.