How long will it take to pay off my mortgage?

The majority of new home loans (57%) are issued with a 30 year term, including 66% of new home loans in Auckland and 83% of first home buyer mortgages.

With that said, if you’ve got a 30 year term that doesn’t necessarily mean you have to take 30 years paying your mortgage off. In fact, there are several ways to pay your mortgage off faster that could help you get debt-free sooner.

If you pay your home loan off more quickly than the 30 year term, it means you’ll pay less interest and enjoy more time debt free, with extra disposable income. During this time you could enjoy an improved lifestyle, an early retirement, or just put more money into other interests and investments. To pay yours off early you could:

The simplest way to pay your loan off faster is to increase your repayments (which we know, may be easier said than done). If you have a variable rate loan you should be able to increase yours as much as you’d like - if your home loan has a fixed interest rate then you may only be able to increase your repayments by a certain amount (often 20%) every time you re-fix your loan.

Often when we receive lump sums of cash from inheritances or other windfalls, we save them or spend them. Putting these lump sums into your mortgage could help pay yours off faster.

Your bank or mortgage broker will most likely offer to make your first mortgage repayment one month after settlement. By simply making your first repayment on your settlement date instead,you’ll pay your mortgage off 30 days sooner. 

When interest rates fall the interest rate portion of your mortgage repayments will decrease and as a result your repayments will be lower. If you keep your mortgage repayments the same when this happens you’ll pay your mortgage off faster. 

Your lender or mortgage broker may offer you the opportunity to add certain charges and fees to your mortgage. Buying a house and refinancing can be expensive so this may be tempting but it can add months or years to your home loan and is best avoided if possible. 

Your home loan may be your household’s biggest expense so it pays to review it regularly - at least once a year. Does it still suit your lifestyle or could you increase your repayments? How does the loan’s interest rate compare to other loans on the market?

To do this you can either browse other lenders on the internet and approach them yourself or use a mortgage broker to do the legwork for you. This simple act, which may take a few hours once a year could save you thousands of dollars and shave years off your home loan term.

*We hope this article has provided some helpful information. It's based on our experience and is not intended as a complete guide. Of course, it doesn’t consider your individual needs or situation. If you’re considering buying a property, make sure to always do your due diligence, and speak with an advisor if necessary.