Tips for paying down your home loan faster, but then what?


We all want to pay off our home loan quickly and be debt-free as soon as possible. It’s worth realising it doesn’t have to take 20 or 30 years to pay off your loan. But once you’ve paid off a significant portion of your home loan, what can you do with your equity?

Let’s delve into some tips for how you can pay off your home loan quicker, and then what you can do with that new-found equity in your home. 

How to pay off your home loan quicker?

Make extra repayments each month, or fortnight

While it may be extremely obvious, extra repayments can really put a dent in your home loan quickly. If you can, it is always wise to make extra repayments. Even small amounts, such as regularly paying an extra $30 or $50 a week, can make a significant difference over time.  

Try find ways to save money – try reduce how often you purchase coffee and take-away food. A popular approach is reviewing your subscription services, mobile phone plan and insurance contracts to ensure you are not paying for features you do not need. 

If you cannot pay more each month, it is still beneficial to pay more often. There are 12 months in a year, but there are 26 fortnights. If you divide your monthly loan repayment in two and make payments each fortnight, you’ll make the equivalent of 13 monthly repayments every year; that’s an extra month’s repayment. 

Use your home loan’s offset account

According to, a useful feature for paying off your loan early is an offset account. Every dollar you keep in this account is offsetting against your loan, ultimately reducing the balance on which interest is calculated. 

 Remember, interest is calculated daily. As an example, it may be wise to keep your monthly salary in the offset, even for just a week, before paying other living expenses to help save on home loan interest. 

Use lump sum windfalls very wisely

Sometimes we’re lucky enough to receive an unexpected windfall. This could be a work bonus, an unexpected tax refund, or an inheritance. It can be very tempting to spend this money on holidays, new appliances, new clothes, or a new car.  However, consider just how that lump sum could help pay down your home loan – this could save you years, and thousands. 

Conduct an annual health check on your home loan

The market for home loan products changes on a regular basis and interest rates move. Never set and forget your home loan – you could save thousands over the life of your loan if you are always on a competitive interest rate.  In a tight market, lenders will always compete for your home loan business – so speak to your Mortgage Broker or Lender to ensure you are getting a good deal. 

Prioritise paying down your home loan

In life, there’s no point in paying for things you do not need – or overpaying for things you do need.  Make paying down your home loan a priority, and review your spending habits and patterns and identify where you can make some minor or major cuts.  

Review your electricity and gas, internet providers and even your health insurance.  Remember, tightening your belt on some of the less important monthly expenses can really make a significant difference over time. 

How best to use your home’s equity?

With every repayment you make, you’re building up equity in your home. Over time, especially if property prices are rising in your area, you may have built up considerable equity. But how can you use it?

Equity is the difference between the current value of your property and your loan balance.  Your home’s equity will increase, by your loan balance decreasing or your property’s value increasing.

If your property is valued at $900,000 and your loan balance is $500,000, then you have $400,000 in equity. You may be able to borrow up to 80% of this equity. You may like to access this equity for buying an investment property, or renovating and extending your existing home.

If you’re looking to purchase an investment property, you can avoid saving for a deposit, by using the equity in your existing home.  Your lender will request a valuation to identify your property’s current market value. This valuation will then be used to determine what your usable equity is. Remember, lenders will consider your income, number of dependants, living expenses and other debt, and will typically release up to 80% of the equity in your home.

Alternatively, you may want to use the equity to renovate or make improvements to your home – for example, by adding a bedroom and bathroom, or adding in a swimming pool. Withdrawing equity for a renovation is a very popular strategy, and you may also see an increase in your property value, once the renovation is complete.

Remember, housing and property is a long-term game and can help to transform your life. To learn more about how property can transform and future proof your life, see our article future proof your life with real estate.  To learn more about what to do before buying an investment property and how to select an investment property, see our articles What to do before buying an investment property? & How to select an investment property

Always seek advice from a trusted professional.

Purchasing and investing in real estate is exciting and when done well, can significantly transform your life.  Your local One Agency specialist, lives and breathes real estate in your area and has insights into exactly what is happening in your community.  

Now is a great time to get started on your property journey, or continue climbing the property ladder, as interest rates are at an all-time low. Our agency is also seeing high-quality family-oriented supply begin to come onto the market, and this is set to continue as we progress through summer.

To learn more about the benefits of real estate investing and what prices may do long-term, please contact us at One Agency.  With One Agency being one of Mildura’s most trusted real estate agencies, we are well placed to provide you with our view of the current market based on our local experience. We’ll thoroughly guide you through the process and help you take advantage of this opportune time in the property market.