The cash rate sits at 4.35 per cent and lenders have just repriced upward, so the interest bill on an average loan is climbing again. A handful of deliberate moves can still take years, and hundreds of thousands of dollars, off a mortgage.
A mortgage is the biggest financial commitment most Australians ever take on: a 25 to 30-year deal with a bank to pay off a home. Left on autopilot, it quietly costs a fortune, and most borrowers never go back and check whether they are paying more than they need to.
Take a $750,000 standard variable loan from Commonwealth Bank, the country's largest lender, at its current variable rate of 6.34 per cent (as at 15 May 2026). That's CBA's best-tier Wealth Package rate, available to borrowers with a loan-to-value ratio of 60 per cent or below and a $395 annual package fee; borrowers with a smaller deposit will pay more, up to 7.74 per cent at the highest LVR tier. Over 30 years of principal and interest repayments at 6.34 per cent, you would hand back about $1.68 million. That is the original $750,000 plus roughly $928,000 in interest, more than the price of the home again.
Because it is a variable loan, the real interest bill rises and falls with the rate. And right now it is rising: the Reserve Bank lifted the cash rate three times earlier in 2026 and has since held it at 4.35 per cent, back to its November 2023 peak. That makes the case for actively managing the loan, rather than setting and forgetting it, stronger than it has been in a long while. The ten tactics below fall into four groups. Worth noting up front: a good broker should be able to beat a headline rate like 6.34 per cent, so treat it as a starting point, not a fixed cost.
Pay more, and pay more often
Add a little to each repayment. Small amounts compound into big savings because every extra dollar comes straight off the principal, so you stop paying interest on it for the rest of the loan. On the $750,000 loan, an extra $100 a month saves around $65,600 in interest and clears the loan about 1 year and 9 months early. Push it to $200 a month and total repayments fall to roughly $1.56 million, cutting more than 3 years off the term. Cost of living is tight, but skip one bought coffee a weekday and the first $100 largely funds itself.
Repay weekly or fortnightly. Interest on your loan is calculated daily on the outstanding balance, so paying more frequently keeps that balance lower for more of the month. On its own the saving is modest. The real gain comes from nudging the amount up at the same time. Switch to weekly repayments and add $25 a week, roughly five coffees, and total repayments on the $750,000 loan drop by about $73,800, with close to 2 years off the term.
Hold your repayment steady when rates change. If you took out your loan near the top of the rate cycle, APRA (Australian Prudential Regulation Authority) rules meant the bank had to test that you could still afford it with an extra 3 percentage points added, a serviceability buffer the regulator has kept in place through 2026. So if a rate cut eventually comes and your situation has not changed, you can comfortably keep paying the old, higher amount. Everything above the new minimum goes straight to principal, and that alone can strip years off the loan.
Make your savings do double duty
Open a 100 per cent offset account. An offset is a transaction account linked to your loan, and its balance is subtracted from the loan before interest is worked out. Keep $50,000 in offset against a $750,000 loan and the bank charges interest as if you owed $700,000, saving around $3,170 in the first year alone, and far more if the money stays there year after year. Australians are among the heaviest users of offset accounts in the world, with balances at record highs according to APRA, one reason many households have handled higher rates better than expected.
But how you structure it decides how much you actually save. Most people run their money like the first diagram below. Pay lands in a transaction account, bills come out, and whatever is left is swept into the offset once a month, where it is soon raided for holidays and other spending. The balance actually offsetting the loan stays small.
The better approach is the second diagram, sometimes called a "master facility". All income lands in the offset first: wages, plus any dividends, investment income or other cash. A pre-set, tightly budgeted amount is then moved into a transaction account each fortnight for bills and spending, and the rest is treated as off-limits unless there is an emergency. Because interest is calculated daily, this keeps the largest possible balance working against your loan every single day. There is a tax angle too: interest saved through an offset is not taxable, unlike interest earned in a savings account, which the ATO treats as income.
Recycle the interest you save. Your bank statement or app will show how much the offset has saved you in interest. If you can afford it, pay that saved amount back onto the loan as an extra repayment, and you turn a passive saving into faster principal reduction.
Keep extra repayments within reach with redraw. A redraw facility works much like an offset, but the extra money sits inside the loan rather than in a linked account. Pay down the principal faster than scheduled and you can pull those extra funds back out later for a big expense, without applying for a new loan, while still saving interest in the meantime. It is a useful middle ground for people who want the interest saving but worry about locking money away.
Run your own "Bank of Mum and Dad". The phrase usually describes parents helping their kids into the market. You can run it in reverse to cut your own mortgage. Adult children with jobs, or parents who are not fully invested elsewhere, can park spare cash in your offset instead of a savings account or term deposit. Treat it as a genuine commercial arrangement: pay them a fair return, keep meticulous records, and check with older relatives that it will not affect their Centrelink benefits. They will also need to declare the interest. As an example, a 19-year-old with $10,000 set aside for a trip next year might earn about 5.5 per cent in a 12-month term deposit. Parked in your offset for the year against a $750,000 loan at 6.34 per cent, that same $10,000 saves you more in interest, and the saving is tax-free. The diagram below shows the difference.
Attack the rate and the expensive debt
Refinance, with your lender or another bank. It sounds obvious, but a lot of people set and forget their biggest liability and end up paying what brokers call a "loyalty tax", a rate quietly higher than what new customers are offered. At least once a year, have a conversation with a mortgage broker about switching to a cheaper loan. There are costs to changing lenders, but most are one-offs, and a lower rate usually recoups them quickly. To really cut the term, keep making your old, higher repayment after you move to the lower rate.
Clear high-interest debt first. Credit cards often carry rates above 20 per cent, and car and personal loans can run well into the teens, far more than a mortgage. Clear those before funnelling money into an offset or making extra home loan repayments. If you have a redraw facility, it can even make sense to pull funds from it, or roll the debt into your home loan, so you are attacking that much dearer interest with money that costs you around 6 to 7 per cent. The maths there is hard to argue with.
Deploy the windfalls
Put tax refunds and bonuses onto the loan. A tax refund from the ATO or an annual work bonus makes an easy lump-sum repayment, because it is money you were not relying on for day-to-day costs. When the Stage 3 tax cuts took effect on 1 July 2024, some finance experts urged households who could afford it to direct the savings straight into their mortgage, suggesting it could take two to three years off an average loan and save more than $75,000 in interest. Check the fine print first: some loans cap how often or how much extra you can repay, and a few charge a fee, so confirm the terms with your lender before making a large one-off payment.
Why it matters now
With the cash rate at 4.35 per cent and lenders repricing upward, taking even a couple of years off a loan saves serious money and eases the long-term burden. The strategies also stack: combine extra repayments, an offset run properly, a sharper rate and steady repayments through any cuts, and the effect compounds well beyond what any single move delivers.
One caveat. Not every tactic suits every borrower. Offset accounts can carry fees or may not be offered on fixed-rate or construction loans, and extra repayments during a fixed term can trigger break costs. Check your loan's terms before you act. But adopt even two or three of these and you can realistically clear the debt well ahead of schedule, which for most households is one of the most powerful financial moves available to them.
