Consider this example.

You have a mortgage of at the average Aussie mortgage size of $665,978, and park $30,000 in your offset account.

In this case, the mortgage size the bank charges interest on is $635,978, which over a 30 year loan term results in a $108,000 interest saving, and sees you paying off your loan 2.8 years sooner.

Using your offset account is one of the simplest ways to claw back money from the bank, so it’s worth taking advantage of.

Make extra lump sum payments whenever you can

Unexpected cash like a bonus, inheritance, or even a juicy Christmas gift from Nanna can be mortgage rocket fuel - if you put that money to work.

Throwing some extra cash at your loan early makes a massive difference because it reduces your loan balance immediately, and that smaller balance saves you on compounding interest for years.

For example, paying an extra lump sum of just $10,000 off a loan of $665,978 in year five will save you around $45,000 in interest costs and cut your loan term by 1.4 years, and $20,000 in extra repayments in year five means $90,000 in interest saved and paying off your loan 2.8 years sooner.

Bonus points if you’re able to throw in that extra cash even earlier, because the sooner you push down the balance, the more the savings compound.

Rethink your loan structure

If you’re serious about getting debt free sooner, your loan structure matters.

Consider whether to use a fixed vs variable loan, or split it up with a combination.

This can give you certainty around your repayments with the flexibility to pay off extra money sooner.

Another more advanced structuring option is using debt recycling to convert non tax deductible mortgage debt into deductible investment debt, this lowers your effective interest rate and means huge interest savings are up for grabs.

Calling out that this area is a bit more advanced, so it’s worth getting some quality advice - but the savings can also be bigger, so it’s definitely worth being across your options.

The wrap

A 30 year mortgage doesn’t need to take 30 years, if you’re smart about how you go about things.

By refinancing regularly, looking at your repayment frequency, using offsets and making extra lump sum repayments, and nailing your loan structuring - you can easily save big.

The five examples above combine to generate $445,964 in interest savings and help you pay off your loan 14.7 years sooner.

This is the same mortgage, with a different strategy - and can give you a completely different financial future.

Ben Nash is a finance expert commentator, podcaster, financial adviser and founder of Pivot Wealth. Ben’s new book, Virgin Millionaire; the step-by-step guide to your first million and beyond is out now on Amazon | Audiobook.

If you want to learn how much you can save on your mortgage, check out our free mortgage comparison tool here.

Disclaimer: The information contained in this article is general in nature and does not take into account your personal objectives, financial situation or needs. Therefore, you should consider whether the information is appropriate to your circumstances before acting on it, and where appropriate, seek professional advice from a finance professional.