Pay off your home loan faster

If you refix to a lower rate and keep your repayment amount the same, you could pay less interest and pay off your home loan faster. 

For example, if you have a $500,000 home loan at an interest rate of 6.84% p.a. on a 25-year loan term, your monthly repayment would be around $3,483.  

If you refixed your home loan on a 4.99% p.a. fixed rate and kept your monthly repayments at $3,483, you could:

• Shave almost seven years off your loan term
• Pay up to $113,000 less in interest over the life of your loan. 

This comparison is based on the assumption that the 6.84% p.a. interest rate remained the same for the duration of your loan.

Every little extra you repay now can make a big difference in the long run. By paying off more now, you’ll reduce the total interest you pay and could shorten your loan term.

We know increasing your regular repayments isn’t always easy, but if you come into some extra money, such as when you get a pay rise, you could consider using some of it to top up your repayments.

For example, if you have a $500,000 home loan at an interest rate of 5.89% p.a. on a 25-year loan term

• Your repayments will be around $3,188 a month
• You will also pay approximately $456,391 in interest over the life of your loan.

But, if you increased the repayments to $3,400 a month (an extra $212 a month): 

• You could shave over three years off your home loan
• And pay up to $68,469 less in interest over the life of the loan. 

This comparison is based on the assumption that the 5.89% p.a. interest rate remained the same for the duration of your loan.

Note, if you want to increase your regular repayments during a fixed rate period, you can only increase the repayments by up to $250 a week, and it must be your first increase that year, to avoid being charged an Early Repayment Recovery. If your fixed rate has ended, or your home loan is on a floating rate, you can increase your repayments by any amount without being charged an Early Repayment Recovery. 

Split your monthly repayment in half and pay that amount fortnightly. While you’ll end up paying slightly more over the course of a year, switching to fortnightly repayments reduces the amount of interest you pay, helping you to pay off your loan faster. 

Following on from our example in tip two where you’re:

• Paying the minimum of $3,188 a month
• And paying a total of $456,391 in interest over the 25-year loan term.

If you changed to paying $1,594 fortnightly:

• You could shave almost four years off your home loan
• And pay up to $82,198 less in interest.

If you are wanting to change your repayment frequency during a fixed rate period then please talk to an ANZ Home Loan Coach first, as you could be charged an Early Repayment Recovery.  

Rounding up your repayment amount could make a huge difference over time. 

Continuing from our example in tip two, where you’re:

• Paying $3,188 a month
• And paying a total of $456,391 in interest over the 25-year loan term 

If you rounded up your repayments to $3,250 a month (an extra $62 a month):

• You could then take around a year off your loan term
• And you could save up to $21,336 in interest.

If you are wanting to change your repayments during a fixed rate period then please talk to an ANZ Home Loan Coach first, as you could be charged an Early Repayment Recovery.

If you come into some extra money (work bonus, inheritance, tax refund, selling shares, selling an asset, side hustle, etc) you could consider making a lump sum payment toward your home loan. 

If your home loan is on a floating rate, you can make a lump sum repayment at any time. However, if your home loan has a fixed rate, every year you can make one lump sum payment of up to 5% of your current loan amount without being charged an Early Repayment Recovery. The year runs from the date, or the anniversary of the date, that your fixed rate period started.

If your lump sum payment is more than 5%, it could be worthwhile saving it for when your fixed rate ends, before you refix your loan again.

The way you structure your loan could help you pay less interest and help pay off your loan faster. There are a range of loan types offering different levels of flexibility, which you can tailor to suit your circumstances.

If you have an ANZ Home Loan with a fixed rate, you can make extra repayments without being charged an Early Repayment Recovery:

• If it’s the first increase that year, you can increase your regular repayments towards your home loan by up to $250 a week.
• Plus, each year you can make an extra lump sum repayment that’s no more than 5% of your current loan amount.

The year runs from the date, or the anniversary of the date, that your fixed rate period started.

Early Repayment Recovery (sometimes called a ‘break fee’) is an amount you pay us to reflect the loss we incur when you repay some or all of the loan early during a fixed rate period.

Talk to us before you decide to repay early, as any Early Repayment Recovery could be large. To make a lump sum payment on your fixed ANZ Home Loan, call us on 0800 269 4663.

With an ANZ Home Loan on a floating rate, you can make extra repayments whenever you like.

In the ANZ goMoney mobile app or Internet Banking, the minimum repayment amount is $100 and you can’t pay off your loan in full. To make a payment less than $100, or pay your loan off in full, call us on 0800 269 4663.

To make a lump sum payment in goMoney or Internet Banking, choose the loan to make the payment to and select Make a lump sum payment. Choose an account to pay from, enter the payment amount, then select Continue. Check and confirm the payment

A guidebook that takes you through ways you could restructure your home loan and make changes to your repayments to pay it off faster and pay less interest.