Pay Home Loan Early? Here's How to Save Big (2026)

Paying off your home loan early is a dream for many Australians. Imagine the freedom of being debt-free sooner than expected, saving thousands in interest and having extra cash flow for your other financial goals. But how realistic is this dream, and what steps can you take to make it a reality? Let's explore the potential benefits and considerations of paying off your home loan early.

Understanding Early Home Loan Repayment

Early repayment of a home loan refers to paying off your mortgage before the end of the agreed loan term. This can be achieved by making extra repayments, increasing the frequency of your payments, or paying a lump sum. While the thought of being mortgage-free is enticing, it's crucial to understand the terms of your loan agreement and any penalties that might apply for early repayment.

Current Market Information and Options

As of 2026, the Australian home loan market continues to evolve, with interest rates fluctuating based on economic conditions. Currently, standard variable rates range from 6.49% to 8.25%, while fixed rates can be anywhere between 5.99% and 7.85% depending on the lender and loan terms. With over 83 lenders in our network at Esteb and Co, we offer a wide array of options that might suit your financial situation.

Understanding these options and their implications can help you make an informed decision about early repayment. It's also important to consult your lender or mortgage broker to confirm any specific conditions or fees associated with your loan.

Steps to Pay Your Home Loan Early

Here’s how you can take practical steps towards paying off your home loan early:

1. Review Your Loan Terms: Check for any early repayment fees or break costs that might apply under your current loan agreement.
2. Create a Budget: Determine how much extra you can afford to pay each month by reviewing your current expenses and income.
3. Set Up Extra Repayments: Arrange to make additional payments on top of your regular monthly repayments. Even small amounts can make a significant difference over time.
4. Utilise an Offset Account: If available, use an offset account to reduce the interest payable on your loan, effectively shortening the loan term.
5. Pay Fortnightly Instead of Monthly: Making payments every two weeks instead of monthly can result in an extra month’s worth of payments each year.
6. Consider Refinancing: Explore refinancing options with Esteb and Co to potentially secure a lower interest rate or more favourable terms.

Tips and Considerations

Before rushing to pay off your home loan early, consider the following expert tips:

• Emergency Savings: Maintain an emergency fund to cover unexpected expenses so that extra repayments don’t strain your finances.
• Investment Opportunities: Weigh the benefits of paying off your home loan early against potential investment opportunities that may offer higher returns.
• Tax Implications: Consider any tax implications, especially if your property is an investment, as interest payments can often be tax-deductible.
• Consult a Professional: Speak with a financial advisor or mortgage broker to ensure the decision aligns with your long-term financial goals.

Frequently Asked Questions

1. Will I incur penalties for paying off my home loan early? Many loans have early repayment fees or break costs, especially fixed-rate loans. Check your loan agreement or consult your lender for specifics.
2. How much can I save by paying off my loan early? The savings depend on your loan balance, interest rate, and the time left on your loan. Extra repayments reduce the principal balance, leading to significant interest savings over time.
3. Is it better to pay off my home loan or invest my money? This depends on your financial goals and the potential returns on investment opportunities versus the interest saved by early repayments.
4. Can I make extra repayments on a fixed-rate loan? Some fixed-rate loans allow extra repayments up to a certain limit. Check your loan terms or speak with your lender.
5. What is an offset account, and how does it help? An offset account is a transactional account linked to your home loan. The balance in this account reduces the loan balance on which interest is calculated, effectively reducing your loan term.
6. How can Esteb and Co help with early repayment? With access to over 83 lenders, Esteb and Co can help you explore refinancing options and find a loan product that supports your goal of paying off your mortgage early.