How many years does it take to pay off a mortgage?
Thirty, says the contract — but the term is a default, not a fact. On a $500,000 loan at 6% p.a., an extra $100 a month finishes the loan 2 years 6 months early and keeps $57,325 out of the bank's hands. Simply paying half the monthly amount every fortnight — same money, different rhythm — finishes 5½ years early and keeps about $124,000. The question was never really "how many years." It's "whose schedule."
Principal-and-interest loan, constant rate, monthly compounding (fortnightly mode compounds per fortnight — the common lender convention). Ignores fees, offset balances and rate changes. General information, not financial or credit advice.
Why early dollars hit so much harder
An amortising loan front-loads interest. In month one of the $500,000 example, $2,500 of the $2,997.75 repayment is interest and only $497.75 touches the principal — a ratio that improves glacially for the first decade. Every extra dollar you pay early is a dollar the bank can never charge 6% on again, compounding in your favour for the entire remaining term. That is why the +$50 chip in the calculator saves more than most people guess, and why the same dollar added in year 25 saves comparatively little.
The repayment figure itself comes from the standard amortisation formula — the same one lenders use — and this page's engine reproduces the textbook reference case exactly: $300,000 at 6% over 30 years is $1,798.65 a month, to the cent.
The fortnightly trick, honestly explained
There are 12 months in a year but 26 fortnights. Pay half your monthly repayment every fortnight and you make 26 halves — 13 whole payments — per year. The thirteenth payment is pure principal you barely notice leaving, which is why the effect is so outsized: 5½ years and ~$124,000 on the example loan. One catch worth checking with your lender: some banks define "fortnightly" as the annual total divided by 26, which spreads the same money thinner and buys you almost nothing. The trick only works when the fortnightly figure is genuinely half the monthly one.
Extras, offsets, refinancing — the pecking order
Extra repayments and a 100% offset account save identical interest dollar-for-dollar; the choice is about access and fees (see the FAQ). Refinancing is the bigger lever when your rate is meaningfully above the market — but restarting a fresh 30-year term on the refinanced balance quietly gives back the years you'd clawed. If you refinance, keep the old payoff date: set your repayment to what it was, not the new minimum. Under Australia's National Credit Code, every advertised rate must carry a comparison rate that folds in fees — it exists precisely because a shiny headline rate plus heavy fees can cost more than the loan you left.
The 30-year term is priced for the bank's patience, not yours
Stretch any debt long enough and the interest column outgrows the principal: on the standard schedule, the $500,000 example costs $579,191 in interest — the bank earns more than the house cost. Nothing about that is hidden; it is simply what a 30-year default does. The borrowers who beat it don't earn more. They just refuse the default.
Every mortgage has two clocks — the contract's and yours. Only one of them is negotiable monthly.
Questions people actually ask
Does paying fortnightly really pay a mortgage off faster?
Only the "half-monthly, every fortnight" version does. There are 26 fortnights in a year, so 26 half-payments equal 13 full monthly payments — you slip in a whole extra month of principal annually without feeling it. On a $500,000 loan at 6% over 30 years, that alone finishes the loan about 5 and a half years early and avoids roughly $124,000 in interest. If your lender instead calculates a "true" fortnightly payment (annual amount ÷ 26), the trick vanishes — check which one your bank uses.
Is it better to put spare money in an offset account or pay extra off the loan?
Mathematically they are near-identical: a dollar in a 100% offset reduces interest exactly as a dollar of extra repayment does, at the same rate. The difference is access — offset money can be withdrawn instantly, while redrawing extra repayments depends on your loan’s redraw terms. Offsets usually cost a package fee; extra repayments are free. If the fee is smaller than the interest the offset saves you, the flexibility usually wins.
Do extra repayments matter late in the loan?
Far less than early on. Interest is charged on the outstanding balance, so a dollar paid in year 2 stops interest compounding against it for decades, while the same dollar in year 25 saves only a few years of interest. The chips in the calculator shrink dramatically if you shorten the remaining term — which is the argument for starting extras now rather than after the next pay rise.
Embed this calculator
Free to use on your own site — it links back here.
Sources
- Standard amortisation formula, engine verified against the textbook reference case ($300,000 @ 6% / 30y → $1,798.65/month, reproduced to the cent).
- National Consumer Credit Protection Act 2009 (Cth) / National Credit Code — mandatory comparison-rate disclosure on advertised home loan rates.
- Reserve Bank of Australia — Lenders' Interest Rates series (published monthly) for current average owner-occupier rates; the 6.00% default here is an illustrative round figure, not a live rate.
Related
A mortgage term isn't a sentence to be served — it's an opening offer, and the counter-offer is whatever you pay next month.