Paying off your mortgage is one of the biggest financial goals for many Australians. As an expat, managing your mortgage while living and working abroad can feel even more challenging. But the sooner you clear your mortgage, the sooner you can free up cash for other financial goals—whether it's investing, saving for your children’s future, or simply enjoying a better lifestyle.

In this blog, we’ll explore eight strategies that Australian expats can use to pay off their mortgage faster. These tips will not only save you time but also thousands of dollars in interest.

1. Switch to Fortnightly Payments

One of the easiest and most effective ways to pay off your mortgage faster is by switching to fortnightly payments instead of monthly ones.

If you're currently making monthly repayments, you're paying 12 times a year. But by switching to fortnightly repayments, you're essentially making 26 payments each year (because there are 26 fortnights in a year). This results in an extra month's worth of repayments over the course of the year—without you even feeling the pinch.

Let's break it down. Say your monthly mortgage repayment is $2,000. Instead of paying $2,000 once a month, you would pay $1,000 every two weeks. Over the course of the year, that adds up to $26,000 in repayments instead of $24,000, giving you a head start on paying down the loan.

For expats, this can take a bit of getting used to as many are on monthly pay cycles. Over time, this small adjustment can knock years off your mortgage term and save you a significant amount in interest. It's also worth noting that increasing this to weekly will also create a slightly better result than fortnightly repayments.

2. Make Extra Payments Whenever Possible

Making extra payments towards your mortgage is another great way to pay it off faster. This could mean using your annual bonus, tax refund, or any extra cash that comes your way. The more you pay off early, the less interest you'll be charged over the life of the loan.

When you first take out a mortgage, a big chunk of your monthly repayments goes towards paying off interest rather than the principal (the actual amount you borrowed). By making extra payments, especially in the early years, you reduce the loan’s principal quicker. This means you'll pay less interest over time and can cut down the life of your mortgage by years.

For example, if you receive an annual bonus of $5,000, you could put it straight into your mortgage, or even your offset account. Not only would you pay off a portion of your loan quicker, but you'll also save on interest—potentially thousands of dollars over time. Many Australian expats receive higher salaries than they would back home, so putting even small portions of these towards your mortgage can have a big impact.

One thing to keep in mind: check with your lender to ensure there are no fees or restrictions on making extra payments. Some loans come with early repayment penalties, so it's worth confirming before you transfer any extra funds.

3. Refinance for a Lower Interest Rate

Interest rates can make a huge difference in how long it takes you to pay off your mortgage. If you're on a high-interest rate, you could end up paying tens of thousands of dollars more over the life of your loan. Refinancing to a lower rate could save you a lot of money and help you pay off your mortgage sooner.

As an expat, refinancing may seem a bit more complicated because some lenders may have stricter criteria for Australians living abroad. But don't let that stop you. Many Australian banks and financial institutions offer competitive loans to expats, and there are also specialist mortgage brokers who work with expats to find the best deal.

Start by comparing interest rates across different lenders. If you find a better rate than the one you're currently paying, approach your lender to see if they’ll match it. If not, it might be worth switching to a new lender. Just be sure to consider any fees involved with refinancing, such as exit fees or application fees for the new loan.

Refinancing can reduce your monthly repayments, but an even better strategy is to keep making repayments at the same level as you were before. This way, you'll pay off the loan faster because more of your payment goes towards the principal rather than interest.

4. Increase Your Regular Repayments

When you’re able to, increasing your regular repayments—even by a small amount—can make a big difference over the life of your loan. This strategy works particularly well during periods when interest rates are lower, but even if rates are rising, you can still try to pay a little extra when you have spare cash.

For example, let’s say your minimum monthly repayment is $2,000, but you could afford to pay $2,500. That extra $500 per month goes directly towards reducing your principal, helping you pay off the loan quicker and reducing the amount of interest you’re charged.

Australian expats often benefit from tax advantages or lower cost-of-living expenses, especially if they’re living in countries with favourable tax regimes. Using that extra disposable income to boost your mortgage repayments will help you get ahead. Even a small increase can shave years off your mortgage.

Some people find it easier to increase repayments by setting an automatic transfer from their salary or main account to their mortgage. This way, it’s a set-and-forget approach—before you know it, you’ve paid off a chunk of your mortgage without even thinking about it!

5. Open an Offset Account

An offset account is a savings or transaction account linked to your mortgage. The money you have in this account reduces the balance of your loan for the purpose of calculating interest. This means the more money you have in your offset account, the less interest you’ll pay on your mortgage.

For example, if you have a mortgage of $500,000 and you keep $50,000 in an offset account, you’ll only be charged interest on $450,000. This can significantly reduce the amount of interest you pay over time, helping you pay off your mortgage faster.

Offset accounts are particularly useful for expats because they allow you to park your savings or any extra funds in a way that directly reduces your mortgage costs. Instead of keeping large sums in a regular savings account, where the interest might be negligible, an offset account works more effectively in reducing your mortgage balance.

However, it’s important to check whether your loan offers an offset feature and whether there are any fees attached. Some loans may charge extra for this feature, so weigh up the costs against the potential savings. If you tend to maintain a high balance in your account, the benefits of an offset account will usually outweigh the costs.

6. Avoid Interest-Only Loans

Interest-only loans might seem attractive, especially for expats looking to minimize their repayments in the short term. With an interest-only loan, you only pay the interest on the loan for a set period, usually five years, and don't start repaying the principal (the amount you borrowed) until later.

While this may reduce your payments in the short term, it’s not a good strategy if your goal is to pay off your mortgage faster. When you're only paying the interest, your loan balance remains the same, meaning you’ll eventually have to pay it down—and possibly at higher interest rates. Plus, during the interest-only period, you're not making any progress in reducing the actual loan amount.

For example, if you have a $500,000 mortgage and you only pay the interest for the first five years, your mortgage balance will still be $500,000 at the end of that period. You’re essentially delaying the inevitable and increasing the total interest you'll pay over the life of the loan.

If your goal is to pay off your mortgage sooner, it's better to stick with a principal and interest loan. This way, each payment you make reduces your debt and brings you one step closer to being mortgage-free.

7. Use Lump Sums to Pay Down the Principal

Many Australian expats receive bonuses, tax refunds, or other lump sums of money throughout the year. Instead of spending that extra cash on non-essential items, consider putting it towards your mortgage as a lump-sum payment. Doing so can significantly reduce your loan balance and the interest you’ll pay over time.

Let’s say you receive a $10,000 bonus at the end of the year. By applying that directly to your mortgage, you’re reducing the principal, which in turn lowers the interest charged on your remaining loan balance. Even a one-off lump sum can shave months or even years off your loan term, depending on the size of the payment.

The earlier in your mortgage you make these lump sum payments, the more you’ll save on interest. This is because in the early years of a loan, most of your repayments go towards paying off interest. By paying off a chunk of the principal early on, you’ll reduce the amount of interest that accrues over time.

For expats, this strategy works especially well if you receive annual bonuses, relocation allowances, or any other large payments as part of your expat package. Instead of parking this money in a low-interest savings account, use it to reduce your mortgage balance and save on interest.

8. Take Advantage of Rate Drops

Interest rates are always changing, and as an expat, you need to be mindful of how these changes affect your mortgage. When interest rates drop, many people simply reduce their repayments and enjoy the extra cash flow. But if your goal is to pay off your mortgage faster, a smarter move is to keep your repayments at the same level as they were before the rate cut.

For example, let’s say your mortgage interest rate drops from 5% to 4%, and as a result, your minimum repayment decreases from $2,500 to $2,200. Instead of reducing your repayment to $2,200, continue paying $2,500 each month. The extra $300 will go directly towards paying off your principal, helping you pay down your mortgage faster and saving you thousands of dollars in interest over the life of the loan.

This strategy works even if you're living abroad. Keeping up with Australian mortgage rate changes is crucial, so be sure to regularly review your loan with your lender or mortgage broker. By staying informed about rate fluctuations, you can take advantage of any opportunities to accelerate your mortgage repayments.

Conclusion

Paying off your mortgage faster doesn’t have to mean making huge financial sacrifices. Small, consistent changes—like switching to fortnightly payments, making extra repayments, refinancing, and using an offset account—can make a big difference in the long run. For Australian expats, it’s all about being proactive with your mortgage strategy while balancing the unique financial challenges and opportunities of living abroad.

The key is to stay engaged with your mortgage and look for opportunities to pay off a little more whenever you can. Whether it’s using your annual bonus or keeping your repayments steady when rates drop, every bit counts. Over time, these strategies can reduce the life of your loan, save you thousands in interest, and give you greater financial freedom sooner.

So if you're an expat with an Australian mortgage, take these tips onboard and start working towards a future free of mortgage stress. It’s not about drastic changes; it’s about making smart, sustainable decisions that will put you on the path to paying off your mortgage faster, no matter where in the world you are.

Ally Home Loans Pty Ltd is your ally in finance for all of your home loan, investment property, business and commercial financing needs. With our wide range of lending solutions, expertise in financial planning and investment strategies, and extensive experience in working with both Australian residents and Australian expats, we are your partners for your lending needs.

Book an obligation-free, complimentary consultation here today.

Ally Home Loans Pty Ltd is an Authorised Credit Representative (Credit Representative Number – 494608) of My Local Broker (Australian Credit License – 481374). Important Disclaimer: Your complete financial situation will need to be assessed before acceptance of any proposal or product.