How to pay off your mortgage faster

Sue Tierney

Your mortgage is likely the biggest financial commitment you'll make in your life. This is why it's important to have an effective strategy in place when it comes to paying off your mortgage faster. 


What makes up a home loan?


Before we discuss our tips to pay off your home loan faster, it's important to at least have a basic understanding of what makes up a home loan.


Home loans consist of two parts: the principal (the loan amount you borrow from the bank) and the interest (the cost of borrowing that money). In general, the interest for your home loan is calculated based on the amount of principal owed each day. This is why home loans are generally harder to pay off at the start of their term. That's because generally the beginning is when we owe the most amount of money. This is also the main reason why paying off a mortgage completely can seem impossible at first, especially for new homeowners.


With this in mind, let's get started with our home loan repayment tips!


Tip #1: Increase your repayments


A typical home loan can have a term of up to 30 years - which is quite a long time. However, small increases in your repayments can quickly add up and shave heaps off your mortgage term and interest payments if done consistently.


Consider the following home loan example:

Home Loan: $700,000

Deposit (20%): $140,000

Interest Rate (2 years): 5.79%

Repayment (fortnightly): $1,510

Home Loan Term: 30 years

Amount Owed: $560,000

Total Interest Paid: $621,040


This basic example illustrates how the interest portion of a home loan ($621,040) can actually exceed the remaining amount owed ($560,000) for the same loan. This is why it's important to start strong and squeeze out as much extra money as possible to increase your repayments.


With the same example in mind, consider what would happen if you were to increase your mortgage payments from $1,510 to $1,600:

New Repayment (fortnightly): $1,600

New Home Loan Term: 26 years

New Total Interest Paid: $523,232


A 90$ increase in repayments resulted in four years being taken off the overall term of the loan, as well as a potential $90K + reduction in total interest being paid. Now, imagine how much more you could save in terms of time and interest payments with an even bigger repayment amount?


Setting up a mortgage structure that maximises the size of the repayments you could make while still allowing you to have a comfortable lifestyle is very important. This is why getting independent financial advice beforehand is key.


Tip #2: Have a flexible mortgage structure


In our previous blog, we discussed how a split home loan can give you both the flexibility of making lump sum repayments to pay off chunks of your mortgage, as well as the security of having consistent monthly repayments. Through the help of an independent financial adviser, you can create a split home loan structure that is specifically designed to pay off your mortgage faster without straining your finances.


Tip #3: Switch from monthly payments to fortnightly payments


This might seem like a strange tip, especially if you assume that you'll simply end up paying the same overall amount, just in more frequent intervals. However, what's less obvious is the fact that you will be able to make two additional payments per year through this simple change if you simply halve the monthly payments and pay it fortnightly.


As mentioned in our first tip, small changes that are consistently done throughout the term of your loan can result in significant changes. This simple change, coupled with increasing your repayment amount, can shave even more years and thousands in interest payments off your mortgage.


Tip #4: Put your money to work


Throughout the year, we often end up accumulating extra money without noticing. This could come from several sources, from tax refunds to the odd piece of furniture being sold on TradeMe. When it comes to paying off your mortgage faster, it pays to be diligent especially when it comes to spare money that we would otherwise neglect. Make it a habit to review your finances and consistently set aside what you can to accumulate more extra payments for your mortgage.


Tip #5: Get creative with mortgage calculators


All major banks feature online repayment calculators that you can use to visualise how you can pay off your mortgage even faster. Have a play and see how far you can take your finances in terms of maximising your mortgage repayments. Seeing the number of years and interest payments you can shave off with a click of a button could be the inspiration you need to take your financial planning into overdrive!


Tip #6: Talk to an independent financial adviser


Like going for a regular check-up with your doctor, talking to an independent financial adviser can help ensure you are repaying your mortgage as fast as you can. Not only that, getting independent advice can also help you plan ahead in case something unexpected happens. From an unexpected promotion at work to welcoming a new baby into your family, life's many ups and downs can easily derail your mortgage repayments without a proper plan.


Talk to our team


There are plenty of ways to pay off your mortgage faster, from increasing your monthly payments, to streamlining your finances to making more extra payments, and updating your financial goals for the year. Sue and her team have decades of experience in helping Kiwis prosper in the New Zealand property market. We would love to have a chat with you!

We're here to help you with home loans, personal finance & insurance.

Latest Insights

Video it. Just in case you ever need to claim it

by Sue Tierney • 7 May 2025
Here’s a tip that might come in handy: Get your phone out, open the camera, and video any possession that you might need to claim on your insurance one day. We sincerely hope you never suffer a burglary, fire or flood – but if you do, you’ll be glad you made a record. A few years ago, we made this suggestion to one of our clients. He videoed his stuff – and wouldn’t you know, he was burgled just two days later. This leads to another piece of advice: Make sure you mention this to your insurer, just in case you find yourself in the same position as the person above. You wouldn’t want the insurance company to start wondering if you’d set the whole thing up. Stranger things have happened. A reminder that we don't offer fire and general insurance. We have no skin in this particular game – we simply want to be helpful. However, if you’d like to talk about these types of insurance policies, we can refer you to some trusted advisers. Note that we don’t get paid referral fees or commissions if you arrange insurance with these people: Our contact at Glenn Stone Insurance (GSI) is Lynley Evans, who manages some of our own insurance. Contact her at lynley@gsi.nz You can also use the tool on Frank Risk online. Click on the link here . Alternatively, we’d be happy to refer you to Tower Insurance. We’d need your authorisation to send them your contact details. Note that Tower do pay us a referral fee. Talk to us if you need to look at your life and health cover. If you haven’t reviewed your life, health, trauma, or income protection insurance recently, now may be a good time to do so. This is especially important if your life has changed. Did you get married, start a family, retire, come out of a relationship, take out a mortgage, or experience any other major changes in recent years? We’re not trying to sell you anything – just helping ensure your cover still meets your needs.  Click on the link below to set up a call. There’s no charge.

Why do we ask so many questions?

by Sue Tierney • 7 May 2025
The reason is simple. Something you may not think is important could actually matter a lot. It could save (or cost) you thousands of dollars. That’s why we’re always keen to catch up. Talking face-to-face on a video call is an opportunity to find out the things that don’t appear in an email or bank statement. Here’s an example: When a 'cash contribution' from the bank is a bad idea. Banks often use cashback offers or other sweeteners to encourage you to sign on the dotted line. This can be a good deal…or it can be a terrible one. It all depends on your personal circumstances. When we talk to you, we’ll ask questions like these: “Could you reduce your loan in the next few years with a lump sum from KiwiSaver?” “Are you expecting a windfall, such as an inheritance or company shares?” “Are you thinking of selling your house and buying in a cheaper location within the next three years?” Your answers to these questions (and the other questions we ask) will determine the type of loan that’s right for you. The sugar hit of a cash contribution from the bank might turn out to be a false economy, because it could end up locking you into a loan term that doesn’t match your objectives. Here's another example. Refinancing your loan might not be a done deal. Refixing with your bank is usually pretty straightforward. But moving to a new bank – i.e. refinancing your mortgage – may not be. First of all, you will have to go through a complete re-application process. Every lender will need a lot of detail, and their questions could be intrusive. That’s fair enough – they are checking if they want you as a customer. It’s a bigger deal than simply rolling over an existing loan. And you may not even be approved. Then you’re back to square one. Of course, there are times when refinancing is the right option – and we’ll be very happy to do it for you. But first we need to dig into your particular circumstances. So we ask a lot of questions. We're here to help you find the right loan. Your emails and phone calls are always welcome. At Sue Tierney Mortgages, we’re here to give advice whenever you’re thinking about rolling over a loan, taking out finance or changing your insurance. Try us. Click on the link below to set up a call. There’s no charge.

Some clever things you can do to reduce your mortgage rate

by Sue Tierney • 25 March 2025
As Registered Financial Advisers , we’re all about doing the right thing for our clients. A big part of that is making sure you don’t pay a dollar more than absolutely necessary.

Wealth creation is not what you own. It’s what you control.

Deliver Sue’s insights straight to your inbox.