How Long Does It Take To Pay Off A Mortgage?

10 Dec How Long Does It Take To Pay Off A Mortgage?

Owning a home is a dream for many, but let’s be honest: paying off mortgages in New Zealand can feel like an uphill climb. There’s no denying that paying off a mortgage is a major goal, and doing so ahead of schedule is an even bigger achievement. Understanding your current repayment timeline and applying a few strategies can help you take control and potentially shorten that journey.

Your mortgage payment timeline can vary widely depending on your loan type, repayment strategy, and other factors. To help you define and understand your options (and possibly speed up the process), our mortgage team at Max Mortgages is breaking everything down in this blog post.

What determines your mortgage payoff time?

Every mortgage is unique. The time it will take to pay off your mortgage will depend on the terms you agree to (or have already agreed to) when your mortgage commences. There are a few factors that influence this timeline:

Loan term

The loan term is the number of years you agreed to take to repay your mortgage. Standard terms are 15, 20, or 30 years. Naturally, a shorter loan term means higher monthly payments but less time spent paying interest, so your mortgage gets paid off quickly.

Interest rate

Your interest rate plays a significant role in how much you pay over time. Lower rates mean less interest, so more of your payment goes towards the loan’s principal, helping you pay off your mortgage faster.

Monthly payments

Making higher monthly payments (beyond the minimum required) can drastically reduce your loan term. Extra payments go directly towards the principal instead of paying off the interest, shrinking the balance faster than sticking to the primary schedule.

Additional payments

Do you get yearly bonuses, tax refunds, or unexpected windfalls? Turning these bonuses into additional payments towards your mortgage can help you knock out chunks of the principal and shave years off your repayment timeline.

Type of loan

Variable-rate mortgages (also known as floating-rate mortgages) and fixed-rate mortgages have different payoff dynamics. Fixed-rate loans are predictable, while variable-rate mortgages can fluctuate depending on market conditions, which might affect how you prioritise payments.

How to pay off a mortgage faster

If you’re eager to own your home outright sooner rather than later, here are some smart strategies to shorten the time to that golden finish line. Keep in mind that these are all dependent on your financial situation and the particulars of your mortgage, so don’t hesitate to get in touch with a Mortgage Adviser when you’re making an accelerated repayment plan for yourself. We’re here to help!

Make biweekly payments

Instead of making one monthly payment, split it into two smaller ones every two weeks. This method results in 26 payments a year (the equivalent of 13 monthly payments), with the extra payment going towards the loan principal, reducing the balance more quickly. In addition, interest is calculated daily, meaning the amount of interest you pay depends on your remaining loan balance each day. By switching from monthly to fortnightly payments, you reduce the loan balance more frequently. This results in less interest accruing over time, helping you further shorten the loan term. By making biweekly payments – paying half of your monthly payment every two weeks – you could shorten a 30-year mortgage by several years.

Round up your payments

Even small increases can make a big difference. For example, if your monthly payment is $1,245, round it up to $1,300. That extra $55 goes directly towards the principal, helping you reduce the loan faster.

Refinance to a shorter term

If you can afford slightly higher payments, refinancing to a 15- or 20-year loan can save you tens of thousands of dollars in interest and get your mortgage paid off years earlier.

Use lump-sum payments

Received a bonus, inheritance, or tax refund? Applying it directly to your principal can significantly dent your mortgage balance.

Review and trim your budget

Finding areas to save money — like dining out less or reducing streaming subscriptions — can free up funds for your mortgage. Even a slight monthly increase adds up over time.

Now that we’ve broken down the factors influencing the length of your mortgage, you might want to try and tailor your mortgage to get it paid off as soon as possible. Paying off a mortgage earlier than planned doesn’t have to feel impossible. Set small goals and celebrate your milestones as you go.

Reducing your balance by $10,000 is a big achievement, and tracking your progress with your online mortgage portal can help mark progress as you go. When in doubt, remind yourself of why you’re doing this. Picture your life when you fully own your home, with no mortgage in sight: more savings, more travel, or simply peace of mind!

So, how long does it take to pay off a mortgage? For most homeowners, a mortgage takes 15 to 30 years to pay off. However, with strategic planning and consistent effort, you can shorten that timeline and save a lot in interest. Remember, every extra dollar you put towards your mortgage brings you one step closer to financial freedom. Why not start today?

Work with the winners of the New Zealand Mortgage Awards and Elite Women Awards

At Max Mortgages, we’re committed to going the extra mile and supporting you as your Mortgage Advisers. We can advise you on the best home loans New Zealand has to offer for your unique circumstances, negotiate with lenders on your behalf, and make plans to pay off your mortgage as quickly as possible.

Ready to begin? Get in touch with your friendly and knowledgeable team today!

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