Paying off a mortgage is one of the biggest financial commitments Australians make — and for many, the interest component can add up to hundreds of thousands of dollars over the life of the loan.
The good news? With the right strategies, you can significantly cut down the interest you pay and potentially pay off your mortgage years earlier.

In this guide, we’ll explore practical and proven mortgage interest saving strategies — tailored for Australian homeowners — so you can make your money work smarter.

1. Make Extra Repayments Whenever Possible

One of the simplest ways to save on mortgage interest is to make extra repayments on top of your minimum requirement.

• Why it works: Mortgage interest in Australia is calculated daily on your outstanding balance. Every dollar you pay early reduces the principal, meaning less interest is charged over time.
• Example: On a $500,000 loan at 6% over 30 years, paying just $200 extra per month could save you over $80,000 in interest and cut your loan term by more than 4 years.
• Tip: If your lender allows, set up an automatic transfer for extra payments to build consistency.

2. Use an Offset Account Strategically

An offset account is one of the most effective tools to reduce mortgage interest — and many Australians don’t take full advantage of it.

• How it works: Your linked bank account balance is “offset” daily against your home loan balance before interest is calculated.
• Example: If you owe $500,000 and have $30,000 in your offset account, you’re only charged interest on $470,000.
• Best practices:
  • Keep your savings and salary in the offset account as long as possible.
  • Pay everyday expenses from this account using a debit card to maximise the offset benefit.

3. Consider Fortnightly Instead of Monthly Repayments

Switching from monthly to fortnightly repayments may sound minor, but it can shave years off your mortgage.

• Why it works: There are 26 fortnights in a year — meaning you make the equivalent of 13 monthly payments instead of 12.
• Impact: That “extra” repayment each year goes directly toward reducing your principal.

4. Review Your Interest Rate Regularly

Lenders often reserve their best rates for new customers, leaving loyal borrowers paying more than they should.

• Mortgage health check: Compare your current interest rate with the market every 6–12 months.
• Negotiation tip: Ask your lender to match a competitor’s rate — or consider refinancing with a better deal.
• Bonus: HR Mortgage & Finance can access multiple lenders to secure competitive rates tailored to your situation.

5. Avoid Interest-Only Periods (Unless Strategically Used)

Interest-only loans may reduce your repayments in the short term but extend the time it takes to pay down the principal — resulting in much higher interest over the life of the loan.

• Better approach: Opt for principal-and-interest repayments if your goal is long-term savings.
• When it makes sense: For certain investors managing cash flow, interest-only can be a short-term strategy — but always get professional advice.

6. Use Lump Sum Payments to Your Advantage

Any unexpected windfall — tax refunds, bonuses, or inheritance — can have a huge impact if used to pay down your mortgage.

• Impact example: A $10,000 lump sum payment on a $500,000 loan at 6% could save over $20,000 in interest and cut months off the loan term.
• Tip: Even small lump sums can compound over time to make a big difference.

7. Consider Refinancing for Better Features & Lower Rates

Refinancing isn’t just about chasing a lower rate — it’s about improving your loan’s flexibility and features.

• Potential benefits:
  • Lower interest rates
  • Access to an offset account
  • Ability to make unlimited extra repayments without penalty
• Caution: Consider refinancing costs such as break fees and government charges — HR Mortgage & Finance can calculate whether the switch is worth it.

8. Minimise Loan Fees and Hidden Charges

Fees might seem small, but over decades they can add up.

• What to look for:
  • Ongoing monthly or annual fees
  • Charges for redraw facilities or offset accounts
• Action: Compare fee structures across lenders and negotiate where possible.

Final Thoughts

Saving interest on your mortgage isn’t just about cutting costs — it’s about gaining financial freedom sooner. Whether it’s making extra repayments, leveraging an offset account, or refinancing to a better deal, the strategies above can help you keep more of your hard-earned money.

At HR Mortgage & Finance, we help Australians find smarter home loan solutions, with personalised strategies to reduce mortgage interest and achieve financial goals faster.

Ready to start saving?
Call 0430 199 695 or visit HR Mortgage & Finance to get a free mortgage review today.