Money Management Strategies: Can You Pay Off Your Mortgage Sooner?

For many people, having a mortgage is the most substantial debt they will ever take on. In Australia, for example, the average mortgage is $384,700 and takes borrowers 25 years to pay off. That’s a huge commitment, but it doesn’t have to be that way. No, we’re not suggesting you forego buying a house. Rather, by employing a few key strategies, you can cut both your mortgage total and how long it takes you to pay it off and become debt-free.

Comparison Is Key

When it comes to applying for a mortgage, the most important thing you can do is to compare mortgage rates. In fact, you should be comparing service rates throughout the moving process, because moving is expensive. Still, no comparison is as important as the mortgage rate comparison.

There are a variety of services that will help you compare mortgage rates, both for original purchases and for those seeking to refinance their mortgage, but many people skip this step. Patrick Boyaggi, CEO of Own Up, attributes this failure to two major facts. First, many first-time mortgage applicants choose their mortgage based on family and friends’ recommendations, and they don’t want to question that advice. And second, most people don’t feel confident in their ability to understand the mortgage process, so they simply don’t look any deeper.

Rather than accepting whatever mortgage you qualify for first, do some comparison shopping, and don’t just look at the big banks. Often smaller banks are better at passing along savings to their customers.

Choose A Fixed Rate Loan

Australian homeowners have the choice between three different types of mortgage: fixed rate, variable rate, and split rate. When mortgage interest rates are high – and even when they aren’t – many are tempted by the potential of variable loans. What if rates fall and I can get a better deal, they ask? Unfortunately, the real question you should be asking is, what if rates go up?

It’s better to choose a fixed rate mortgage because you can be sure of what your payments are from month-to-month. If rates do drop, you can always apply to refinance your mortgage, but if you choose a variable mortgage, you leave control in the hands of your lender, and your payments can spiral out of control. Split loans divide your mortgage into multiple accounts with different rates, but for most that’s overly complicated.

Try A Different Payment Schedule

Most people pay their mortgages on a monthly payment schedule, and they do it that way because that’s how we pay our credit cards and other bills. Most mortgage providers actually offer two different payment schedules, though – monthly, and fortnightly. Go with the fortnightly payment option to pay off your loan more quickly. There are about two and a half fortnights to a month, which means you’ll make a few extra payments over the course of the year, chipping away at your mortgage.

Consider paying off early for a reverse mortgage.  

If you are fortunate enough to retire with a free and clear home, you will also be able to take advantage of a federally insured reverse mortgage for seniors age 62 and older. This is a special loan that allows you to tap back into the equity that you’ve paid down over the years and draw out funds as a tax-free source for your lifetime. Reverse mortgages do not require a repayment for as long as you live in the home and maintain your future property taxes and insurance and your errors will still receive remaining equity after you have passed in the loan is repaid. If you were interested in learning more about how reverse mortgages work visit

Refinance The Right Way

As mentioned above, when you have a mortgage, you have the option to refinance it to get a better rate, but you need to do it strategically if you’re going to successfully pay off your mortgage sooner. In particular, you want to be able to remortgage for a shorter term, or for a lower interest rate that will allow you to make larger payments. You also need to ensure that your savings won’t be nullified by additional refinancing costs, like appraisals and origination fees. You can use a breakeven refinancing calculator to be sure you’ll actually save money.

While applying for a mortgage is a huge financial responsibility, it also comes with the excitement of owning a home. And while the debt can take a long time to pay off, it isn’t forever. It’s all about being savings-savvy and putting your repayment first.

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