Once you have a mortgage, two levers make the biggest difference to what it ultimately costs: paying a little more than you have to, and offsetting savings against the balance.
Interest is charged on the balance, so early payments matter most
In the early years of a loan, most of each repayment is interest and only a small slice reduces principal. Any extra dollar you pay goes entirely to principal — and because it reduces the balance every subsequent period is calculated on, its effect compounds for the remaining life of the loan.
This is why an extra $100 a fortnight in year one saves far more than the same $100 in year twenty. More frequent repayments reduce the principal sooner, so less interest accrues.
How an offset account works
An offset account is a transaction or savings account linked to your mortgage. Its balance is subtracted from your loan before interest is calculated. With a $500,000 loan and $50,000 offset, you're charged interest as though you owed $450,000.
The advantage over simply paying down the loan is access: the money stays yours and can be withdrawn any time. That makes an offset a sensible home for an emergency fund — it earns you the equivalent of your mortgage rate, tax-free, while staying liquid. A revolving credit facility works on a similar principle.
Lump sums
A one-off lump sum — an inheritance, a bonus, a work payout — behaves like a permanent step down in your balance. Applied early, a modest lump sum can remove years from the term. Check your loan's conditions first: fixed-rate loans often limit extra repayments and may charge a break cost.
Shortening the term versus reducing the repayment
When your circumstances improve, you can either keep the repayment the same and finish earlier, or reduce the repayment and keep the term. Keeping the repayment steady is what produces the large interest savings — and one straightforward version of this is switching from monthly to fortnightly payments, which adds roughly an extra month's worth of repayments each year.
Test yourself against a higher rate
Before committing, look at what your repayment would be at a rate two or three points higher. Banks do this as a matter of course, and it is a useful private sanity check on whether a loan is comfortable or merely possible.