How to Pay Off Your Mortgage in 5 Years or Less

Accelerated repayment strategies for Australian homeowners

Paying off your mortgage in five years is ambitious but achievable with discipline and the right loan setup. The key is making extra principal payments well beyond the minimum, which cuts interest and shortens your loan term dramatically. Fast-track strategies:

• Switch to fortnightly repayments: Paying half your monthly amount every two weeks results in 13 monthly payments a year, reducing interest and time.

• Use an offset or redraw: Money sitting in an offset account lowers the interest charged on your loan.

• Make lump-sum contributions: Direct bonuses, tax refunds and any windfalls straight onto the principal.

• Redirect savings: Cut non-essential spending and funnel every saving into the loan.

Ensuring your loan is flexible enough for these strategies is essential. HeyNest can connect you with an independent broker to review your current loan or find a more suitable product.

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Budgeting and income allocation

A five-year payoff requires strict budgeting and maximising income. Every unnecessary dollar should go to the mortgage.

What to focus on:

• Adjust the 50/30/20 rule: Increase the percentage of income going to your mortgage principal, potentially 50% or more after essentials.

• Automate extra payments: Schedule additional transfers right after payday to avoid spending temptations.

• Boost income temporarily: Rent out a room or take on freelance work and put all extra earnings toward the loan.

• Track progress: Use a spreadsheet or app to stay motivated as your principal drops.

HeyNest brokers can help you structure your loan for efficient, penalty-free extra repayments.

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Optimising your loan structure and rate

Your interest rate heavily influences how fast you can clear your mortgage. To accelerate repayment, secure the lowest rate and a flexible loan that allows large extra payments. Key actions:

• Negotiate rates aggressively: A broker can often secure discounts not advertised.

• Review and refinance regularly: Compare your rate every 12-24 months and refinance if a better offer appears.

• Avoid unnecessary features: Stick to low-rate, flexible loans and avoid costly packages unless they add real value.

HeyNest connects you with expert brokers across Australia who can compare lenders and help structure your loan to achieve your goal of paying off your mortgage in five years.

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Frequently asked questions

Is it realistic to pay off a mortgage in 5 years in Australia?

It is achievable, but it typically requires high income, significant lifestyle sacrifices and a large upfront deposit or substantial initial equity.

What is the best type of loan for aggressive repayment?

A loan with a low variable rate, a 100% offset account and unlimited penalty-free extra repayments is usually ideal.

Will I be penalized for paying off my mortgage early?

If you have a fixed-rate loan, you may incur significant break fees. Variable loans typically allow unlimited extra repayments without penalty.