The Truth About Paying Off Your Home Loan in 7–10 Years
If you’ve ever clicked on a Facebook or Instagram ad about paying off your home loan in under 10 years, chances are you’ve been bombarded with more of them since. I’m all for reducing debt as quickly as possible. But let’s be real: not all strategies are created equal, and not all of them are safe.
The Mortgage “A 30-year cashflow commitment”
There’s a growing wave of content demonising the 30-year mortgage, and with good reason. It’s a long time to stay in debt. Here in Australia, we’ve now crept into 35 and even 40-year loan terms. Why? Because banks use it as a way to reduce monthly repayments, meaning you can borrow more.
It’s a clever little trick that on paper looks helpful, but in reality? It’s a move that benefits the bank more than it benefits you. It’s about keeping people in debt for longer. And to me, that’s exceedingly unethical.
Paying Down Debt = Good. But How You Do It Matters
Reducing your home loan term is a brilliant goal. But the way you go about it makes all the difference. You’ve got two main levers to pull:
1. Increase repayments – This is the lever you control.
2. Lower your interest rate – This will help, but isn’t always within your control.
Let’s say you’ve got a $600,000 home loan at 5.95%. The monthly repayments come in at $3,600. Stick to that and you’re looking at a 30-year loan with $684,000 paid in interest alone.
But if you can boost your repayments to $6,425/month? You’ll shave 20 years off your loan and be mortgage-free in just 10 years and 6 months and reduce your interest cost to $209,500, a saving of $474,500, assuming rates stay steady.
Not everyone can do that. It’s a massive cash flow commitment. So how are these online ads showing people who’ve done it?
The Catch: Debt-Swapping with a Side of Risk
When you watch those glowing testimonials, you’ll notice something: most of them aren’t just paying down their home loans. They’re also purchasing multiple investment properties.
So yes, they’re aggressively tackling their non-tax-deductible debt (their home loan). But behind the scenes, they’re taking on large amounts of investment debt to do it.
Let’s be crystal clear: this is not a risk-free strategy.
It often depends on:
- Access to positively geared investment properties
- A belief that Australian property will double every 10 years
- Continued high employment and rental demand
And here’s the problem, positively geared properties in Australia are like hen’s teeth. Most properties are still negatively geared, meaning the rent doesn’t cover the cost of the mortgage and expenses.
So, what’s happening in many of these cases? People are shifting and increasing risk, not removing it.
Are Property Prices Really Going to Keep Doubling?
Over the past 30 years, we’ve seen property in many parts of Australia double roughly every decade. But from these price levels, can we really expect the same?
That’s where the risk kicks in. If you’re taking on large investment debt in the hope that property values will keep rising fast enough to make the numbers work, well, that’s not guaranteed. And in an environment of higher cost of living, and potentially stagnating prices, it’s a dangerous bet.
The Safe Way to Pay Off Your Home Loan Faster
Here’s the boring truth (and it’s usually the boring stuff that works):
- Lock in a competitive interest rate.
- Pay more than the minimum—as much as you can afford without sacrificing your lifestyle.
- Don’t stretch yourself so thin that life becomes all about the mortgage.
Use resources like the Money Smart website. Their mortgage calculator is fantastic. Plug in your numbers and see what it takes to pay off your loan in 7–10 years.
And here’s a mindset shift worth adopting: you decide when your loan is paid off, not the bank.
Final Thoughts
Paying down debt is powerful. It gives you freedom, options, and peace of mind. But doing it by taking on more debt, especially in today over valued property market, is a risky road.
Do your research. Ask tough questions. And always check who’s behind the advice, what are they really selling you?
Paying off your home loan in 7–10 years is possible. But do it the right way, not the risky way.
The information provided in this article is general in nature only and does not constitute personal financial advice.
