Borrow
The remarkably simple way to pay off your mortgage sooner
For those looking to get out of debt quicker, a mortgage broker has explained a remarkably simple trick to pay off a home loan sooner.
The remarkably simple way to pay off your mortgage sooner
For those looking to get out of debt quicker, a mortgage broker has explained a remarkably simple trick to pay off a home loan sooner.
In a conversation with nestegg, Two Red Shoes’ mortgage broker, Rebecca Jarrett Dalton, explained how mortgage-holders should switch their payment cycles.
“The quickest way to pay off a [mortgage] is weekly or fortnightly repayments,” Ms Jarrett Dalton said.
Ms Jarrett Dalton pointed out that this is because interest is calculated on a daily basis.
“Most banks calculate [a weekly or fortnightly repayment] by taking the monthly repayment and dividing it by four or two.”
“But there’s actually more than four weeks in a month and more than two fortnights. So, you accidentally pay 1/12th of a month extra repayment and that is a whole month of extra repayment in a year,” Ms Jarrett Dalton said.
These small changes create a compounding effect on the loan, due to interest being calculated on daily outstanding balance as well as an accumulative effect of a whole month’s repayment each year.
“An average loan of $400,000 will save about five years and $80,000 on interest,” Ms Jarrett Dalton explained.
For those looking to pay off a loan even quicker, Ms Jarrett Dalton said investors could make small additional repayments.
“If you can take it a little further and add $20 or $50 and bump it up, you’ll be able to pay it off even faster,” Ms Jarrett Dalton said.
“An offset account can be really effective if you have a large enough sum of money.”
“Another really effective way, and I’ve done this myself, is sending base income to the spending account and anything over base to go straight into the home loan.
“Most of us don’t rely on that variable income for our weekly budget, so it’s spare. If you haven’t seen it, you haven’t missed it,” Ms Jarrett Dalton said.
She explained that investors in a low interest rate environment where savings rates might be below 2 per cent, mortgage-holders are better off using additional savings to pay down their mortgage.
“I call this supercharging. You can have your money sitting in a savings account and earning at the most 1-point something, or the flip side, if you have a loan, your saving interest that could be almost double.”
“There’s also no tax on interest that you save, but of course you have to declare any interest earned on your tax return,” Ms Jarrett Dalton concluded.
RELATED ARTICLES
About the author
About the author
Loans
Fixing the future: How brokers and lenders can turn rate-hike anxiety into strategic advantage
Australian borrowers are leaning into short-term fixed loans as rate uncertainty lingers, shifting risk from households to lenders and their funding partners. That creates a narrow window for broker ...Read more
Loans
Mortgage mania: Why sluggish turnaround times are the new battleground in booming loan demand
Brokers across Australia are flagging loan processing delays precisely as borrower activity rebounds — a dangerous mismatch for lenders competing on service as much as price. The operational lesson is ...Read more
Loans
Why AI isn't penning Aussie mortgages yet trust trumps tech
Australian borrowers remain wary of AI taking the wheel on home loans, even as brokers and lenders quietly increase behind-the-scenes adoption. The trust gap is the core blocker — and it’s solvable. ...Read more
Loans
Underserved by design: A case study in turning FBAA broker density gaps into growth
Fresh FBAA data confirms broker headcount is rising past 22,000, yet coverage remains uneven — with concentrations in NSW and Victoria and pockets the association identifies as underservedRead more
Loans
The new shadow lender: How the ‘Bank of Mum and Dad’ is redrawing Australia’s first-home buyer market
Parental capital has become a decisive force in Australia’s housing market, accelerating deposits, lifting bidding power and creating a two‑speed pipeline of first‑home buyers. This isn’t a feel‑good ...Read more
Loans
The effortless edge: How Australian brokers turn retention into a compounding growth engine with AI and specialisation
Australia’s broking market is crowded, digital-first and unforgiving on acquisition costs. The growth story now is retention—engineered through low-effort client experiences, AI-enabled servicing and ...Read more
Loans
State Street: RBA holds rates at 3.6% as hawkish tone emerges
State Street has said the Reserve Bank of Australia’s (RBA) decision to hold the cash rate at 3.6 per cent reflects a more hawkish policy bias, signalling that the central bank is likely to keep rates ...Read more
Loans
The effortless edge: How brokers turn low-friction service into high-retention value
Client retention in broking is no longer about squeezing a better rate at renewal. It’s about building an ‘effortless’ experience that anticipates needs, removes friction, and compounds loyalty across ...Read more
Loans
Fixing the future: How brokers and lenders can turn rate-hike anxiety into strategic advantage
Australian borrowers are leaning into short-term fixed loans as rate uncertainty lingers, shifting risk from households to lenders and their funding partners. That creates a narrow window for broker ...Read more
Loans
Mortgage mania: Why sluggish turnaround times are the new battleground in booming loan demand
Brokers across Australia are flagging loan processing delays precisely as borrower activity rebounds — a dangerous mismatch for lenders competing on service as much as price. The operational lesson is ...Read more
Loans
Why AI isn't penning Aussie mortgages yet trust trumps tech
Australian borrowers remain wary of AI taking the wheel on home loans, even as brokers and lenders quietly increase behind-the-scenes adoption. The trust gap is the core blocker — and it’s solvable. ...Read more
Loans
Underserved by design: A case study in turning FBAA broker density gaps into growth
Fresh FBAA data confirms broker headcount is rising past 22,000, yet coverage remains uneven — with concentrations in NSW and Victoria and pockets the association identifies as underservedRead more
Loans
The new shadow lender: How the ‘Bank of Mum and Dad’ is redrawing Australia’s first-home buyer market
Parental capital has become a decisive force in Australia’s housing market, accelerating deposits, lifting bidding power and creating a two‑speed pipeline of first‑home buyers. This isn’t a feel‑good ...Read more
Loans
The effortless edge: How Australian brokers turn retention into a compounding growth engine with AI and specialisation
Australia’s broking market is crowded, digital-first and unforgiving on acquisition costs. The growth story now is retention—engineered through low-effort client experiences, AI-enabled servicing and ...Read more
Loans
State Street: RBA holds rates at 3.6% as hawkish tone emerges
State Street has said the Reserve Bank of Australia’s (RBA) decision to hold the cash rate at 3.6 per cent reflects a more hawkish policy bias, signalling that the central bank is likely to keep rates ...Read more
Loans
The effortless edge: How brokers turn low-friction service into high-retention value
Client retention in broking is no longer about squeezing a better rate at renewal. It’s about building an ‘effortless’ experience that anticipates needs, removes friction, and compounds loyalty across ...Read more
