Paying off a $400,000 mortgage in under five years sounds extreme, maybe borderline impossible for most everyday Australians living in conditions where the cost of living seems on a never-ending upwards trajectory. But a growing number of Aussies are becoming mortgage free sooner with the right mindset, structure, and strategy.
If you’ve ever dreamed of being mortgage-free while your friends are still paying theirs off, this guide will show you how. It’s not magic, it’s math, momentum, and a plan.
Start With the Right Foundation
Before you go all-in on your payoff mission, check that your loan is set up for flexibility.
A true “fast-track” mortgage needs to allow:
- Unlimited extra repayments (no penalty for paying more)
- Offset or redraw access (so you can still access funds if life happens)
- Competitive, variable interest rate (so extra repayments hit your principal fast)
- Low or no discharge and refinance fees
If your current loan doesn’t tick these boxes, refinancing could be the best first step. Even shaving 0.5–1% off your rate can save thousands in interest — and that’s money you can redirect straight to your loan.
At Base Home Loans, we regularly help clients switch to flexible, low-rate products designed for borrowers who want to get ahead fast and be mortgage free sooner.
Map Out Your Mortgage-Free Timeline
To pay off a $400,000 loan in 5 years, you’ll need to repay roughly $6,900 per month at an average 5.5% interest rate.
That’s intense, but not impossible if you combine multiple strategies:
- Increase income (through side hustles or extra work)
- Reduce lifestyle spending
- Apply all windfalls (tax returns, bonuses) directly to the loan
- Maximise offset savings
Even partial progress counts. If you can’t hit 5 years, aiming for 8–10 years instead of 30 can still save you over $200,000 in interest.
Supercharge Your Income
A bigger income makes everything easier. Instead of focusing only on cutting costs, look at how you can grow the gap between income and expenses.
Ways to boost cash flow include:
- Freelancing or consulting in your field
- Launching an online side business
- Taking on weekend shifts temporarily
- Negotiating a pay rise
- Renting out a spare room or granny flat
Case Study: Sarah & Jake, Perth
This couple both worked full-time and took a disciplined approach. Jake picked up weekend electrical work while Sarah started an online store. They earned an extra $1,800 per month, kept their living costs flat, and paid off their $395,000 loan in 4 years and 9 months.
Financial discipline is the secret weapon here. For 4–5 years, live as if you still have a mortgage, even as your balance drops.
Live Like You’re Still Broke (For a Little While)
Try:
- Keeping your car longer
- Cooking at home and meal prepping
- Cutting unnecessary subscriptions
- Delaying lifestyle upgrades until you’re debt-free
Case Study: Emily, Single Homeowner in Baldivis
Emily kept her spending in check, put every spare cent into her mortgage, and refinanced after two years to drop from 6.3% to 5.4%. That single change shaved $18,000 in interest and helped her pay off her $400,000 home in five years flat.
Leverage Offsets and Redraws Wisely
Offset accounts are one of the most underused tools for accelerating your loan payoff.
Every dollar in your offset account reduces the balance your interest is calculated on.
Example:
If your loan is $400,000 and you keep $25,000 in your offset, you’ll only pay interest on $375,000. Over a few years, that can save tens of thousands in interest.
Smart tip: have your salary paid straight into your offset account and pay expenses via debit. This keeps your balance higher for longer.
Make More (and More Frequent) Repayments
Switching to fortnightly repayments instead of monthly effectively gives you one extra month of payments per year, without feeling the pain.
Better yet, round up every repayment. If your repayment is $2,346 per month, make it $2,400. Those little top-ups add up to thousands over time.
Throw Every Windfall at the Loan
Tax refund? Bonus? Side hustle profit? Unexpected cash? Don’t spend it — deploy it.
Let’s say you get a $10,000 tax refund each year and put it straight into your loan. In five years, that’s $50,000 off the balance, plus thousands saved in interest.
This strategy alone could cut five to seven years off your loan term.
How Extra Repayments Actually Change the Game
Here’s what happens when you increase your repayments on a $400,000 home loan at 5.5% interest.
| Extra repayment per month | Loan term reduced to | Interest saved (approx.) |
| $0 (minimum only) | 30 years | |
| +$500/month | 21 years, 2 months | $131,000 saved |
| +$1,000/month | 15 years, 4 months | $205,000 saved |
| +$1,500/month | 11 years, 4 months | $256,000 saved |
| +$2,000/month | 8 years, 8 months | $289,000 saved |
| +$3,000/month | 5 years, 3 months | $322,000 saved |
As you can see, it’s not just about big lump sums, even consistent, modest increases can shave off years.
Know the Trade-Offs
While paying off your mortgage fast is empowering, it’s not always the best choice for everyone.
Consider:
- Liquidity — once money is in your loan, it’s not as easy to access (unless you have a redraw)
- Investment opportunity cost — the return from paying off your loan equals your interest rate. If you could invest at higher returns elsewhere, weigh the trade-off
- Break or discharge fees — some fixed loans charge exit fees for early repayment or refinance
- Lifestyle balance — you still need to live and enjoy life along the way
The sweet spot is finding a balance that keeps your money working hard and lets you sleep at night.
Stay Motivated and Track Your Progress
Create visible milestones:
- Watch your balance shrink monthly
- Celebrate key wins (like getting under $300k, then $200k)
- Review your strategy yearly to see if you can push harder
Some clients set a “mortgage-free date” on their fridge and count down. A little motivation goes a long way.
What Happens Once You’re Mortgage-Free?
This is the fun part.
Once your home is paid off, you’ve suddenly freed up thousands a month. Here’s what to do next:
- Redirect those funds into investments or super
- Start building an emergency fund (if you don’t already have one)
- Consider buying an investment property
- Enjoy more flexibility. Travel, reduce work hours, or support your family
Financial freedom isn’t just about owning your home, it’s about having choices.
Is Paying Off a $400k Mortgage in 5 Years Really Possible?
Yes — but it requires clarity, commitment, and often, outside guidance.
At Base Home Loans, we’ve helped Perth homeowners refinance, restructure, and rethink their money so they can become mortgage-free faster. Even if 5 years is too ambitious, cutting a 30-year loan to 10 or 15 years can change your life.
Book a free home loan review today to see how much faster you could pay off your home.
Disclaimer: The information provided on this blog is for general informational purposes only and does not constitute financial or professional advice. While we strive to provide accurate and up-to-date information, mortgage laws and regulations can change, and individual circumstances may vary. We recommend consulting with a qualified financial advisor or mortgage broker to assess your specific situation and needs. Base Home Loans is not responsible for any actions taken based on the content of this blog. Always conduct your own research and consider seeking professional advice before making financial decisions. The examples used here are illustrative in nature and do not reflect any actual people or clients. Any characters are completely fictional and for illustrative purposes only.
