How to Pay Off Your Mortgage Faster: Smart Strategies for New Zealand Homeowners
Owning a house is a great achievement, but you want to have a mortgage-free home as soon as possible! It will save you thousands in interest and allow you to gain financial freedom more quickly.
At Rapson, Tauranga’s trusted mortgage experts, we have helped many Kiwis take control of their home loans.
Here is our ultimate guide on how to shave years off your mortgage…
At Rapson, Tauranga’s trusted mortgage experts, we have helped many Kiwis take control of their home loans.
Here is our ultimate guide on how to shave years off your mortgage…
1. Increase Your Repayment Amounts
Even small increases in your repayments can make a big difference. Let’s say you have a $650,000 mortgage at 6% over 30 years. Your minimum repayment is about $3,897 per month. Increase your repayments by just $100, and you could save around $42,000 on interest and cut down your loan term by nearly 3 years!
Top tool: Use the Rapson Mortgage Calculator to determine your repayments.
2. Switch to Fortnightly Payments
Switch to fortnightly repayments instead of settling your mortgage monthly. Since there are 26 fortnights in a year but only 12 months, you’ll effectively make one extra repayment per year. For that same $650,000 loan, this could cut up to 4 years off your mortgage and save you $78,000+ in interest!
3. Keep Repayments the Same as Interest Rates Drop
If your rate drops but you keep repayments at the original level, you’ll pay more toward the principal. For example, if interest rates drop from 6% to 5%, your monthly repayment would drop to $3,487. If you keep paying $3,897, you could shave 5 years off your mortgage!
4. What is Portability and How It Can Help if You Move
If you’re planning to move, a portable loan allows you to transfer your mortgage to a new home without breaking the loan. This saves thousands in break fees and keeps your repayment progress intact.
5. Pay Your Mortgage at Settlement and Reduce Your Principal
Most lenders let you postpone your first payment for a month, but making it on settlement day means you’ll immediately reduce the principal. If you’re borrowing $650,000 at 6%, this could save you over $6,500 in interest over the loan’s lifetime.
6. Set a Target Loan to Pay Off
Instead of looking at your entire mortgage, focus on carving off a chunk each year. For example, if you decide to repay $20,000 in 12 months, you’ll stay motivated and see real progress. If you keep doing this every year, you’ll be mortgage-free much faster.
7. Pick Between a Split or Floating Mortgage
A floating rate lets you make extra repayments without penalties. A split loan (part fixed, part floating) gives you flexibility while still locking in a good rate. If you can put extra money into the floating portion, you’ll pay less interest overall.
8. Boost Your Mortgage Payoff with Windfalls
Did you get a great bonus, tax refund, or inheritance? Instead of splurging, put it straight into your mortgage. A $6,500 lump sum on a $650,000 mortgage could cut nearly a year off your loan!
9. Pay Loan Fees Upfront, Save Thousands
When refinancing or getting a new loan, pay the fees upfront instead of adding them to your mortgage. A $3,900 fee added to a 30-year loan at 6% will cost you over $6,500 in total.
10. How Small Savings Can Make a Big Difference
Small lifestyle changes can add up. Cutting out a $5 coffee five times a week saves $1,300 per year. Add in a few other small savings, and you could put an extra $5,000 toward your mortgage annually.
11. High-Interest Debt vs. Mortgage: Which to Pay Off First?
If you have credit card debt at 20%, it makes no sense to focus on your 6% mortgage first. Prioritise paying off personal loans and high-interest debt before aggressively tackling your home loan.
Current Mortgage Interest Rates from Major New Zealand Banks
As of February 19, 2025, here are some of the latest fixed-term mortgage interest rates as highlighted on www.mortgagerates.co.nz.
Financial Freedom Starts Here
A mortgage doesn’t have to be a 30-year burden. With a few strategic moves, you can dramatically reduce the term and interest paid. Whether it’s increasing repayments, using windfalls wisely, or choosing the right loan structure, every little bit counts.
Why pay more than you have to? Discover practical ways to reduce your mortgage term and gain financial freedom faster. Chat with the team at Rapson and start saving today!