Scenario A · PPOR only
$0
net position at 30 yrs
Scenario B · PPOR + investment property
The difference
Adjust the numbers to see how the investment strategy compares.
PPOR debt over time
PPOR only
PPOR + IP
How the IP strategy accelerates payoff
- Rental income covers most of the IP holding cost.
- When the IP runs at a loss, negative gearing returns cash at your marginal tax rate.
- Surplus cash is redirected straight onto the PPOR principal each year.
- Once the PPOR is clear, the freed-up repayment pivots to smash the IP debt.
- Meanwhile the IP compounds in value in the background.
This is the exact strategy we model for clients. If you want a second opinion on whether it stacks up for your income and goals, we can help.
Book a free strategy call
Indicative only. Assumes constant interest rates, rental income matching today's figure, and capital growth compounded annually. IP loan is modelled as interest-only. PPOR amortisation is calculated monthly, with investment-driven surplus applied annually. Actual outcomes depend on lender policy, tax circumstances, vacancy, depreciation, and market conditions. Speak to a qualified mortgage broker and accountant before acting.
Paying Off Your Home Faster With an Investment Property
The strategy looks counterintuitive: take on more debt to clear your home loan faster. The maths only works because of how tax deductions, equity growth, and offset accounts interact. Done right, an investment property can shave 5 to 12 years off a 30-year home loan. Done wrong, it drags both properties down.
This calculator compares two paths over 30 years: paying down your owner-occupier mortgage as fast as possible, versus splitting capacity between PPOR and an investment property. The output is total wealth and remaining mortgage at each year mark.
How the Strategy Works
Your home loan interest is not tax deductible. An investment loan's interest is. So $1,000 of investment loan interest costs you $530 to $700 net of tax (depending on your bracket), while $1,000 of home loan interest costs the full $1,000. By using available borrowing capacity for an investment property, the tax system pays a chunk of the carrying cost, the tenant pays another chunk via rent, and you direct cash flow back to the home loan principal. The investment grows in equity over the same period, multiplying total wealth.
When the Strategy Works
It works when three conditions hold. One, your borrowing capacity is sufficient for both loans. Two, the investment market grows at a reasonable rate (4 to 6 percent annual or better). Three, you have the cash flow tolerance for the periods when the investment is negatively geared. If any one of those three breaks, the strategy stalls. Investors who try this without modelling their cash flow position year by year sometimes find themselves selling the investment under duress.
When the Strategy Doesn't Work
If you're already at the top of your borrowing capacity, the strategy can't begin. If your home loan is already small relative to your income, the maths becomes marginal. If your investment market doesn't grow, you've taken on debt for nothing. If you're risk-averse to the point that two mortgages keep you up at night, the psychological cost outweighs the financial benefit.
Why You Don't Just Pay Off Your Home Faster
Counterintuitively, the fastest way to pay off your home is rarely to throw all spare income at the home loan. Compounding works against you on a single asset. Two properties growing in parallel, one paying tax-deductible interest, can produce more wealth and a faster home payoff than one property alone. The growth projection calculator models this side by side.
Pair this with the cash flow calculator for the year-by-year tolerance check, the negative gearing calculator for tax detail, and the yield calculator for the property side. Speak with a property investment advisor if you want to walk through your specific numbers.
Paying Off Your Home Loan Faster: FAQs
How can I pay off my home loan faster in Australia?
The most effective levers are an offset account, extra repayments, and switching to fortnightly payments. An offset reduces the balance you are charged interest on, extra repayments cut the principal directly, and paying fortnightly squeezes in the equivalent of one extra monthly repayment each year. Combining all three, and keeping repayments steady when rates fall, can take years off the loan.
How does an offset account help me pay off my mortgage sooner?
An offset is a transaction account linked to your home loan. Its balance is subtracted from your loan balance before interest is calculated each day. If you owe $500,000 and hold $20,000 in the offset, you are only charged interest on $480,000. Because home loan interest is calculated daily, every dollar in the offset lowers your interest while staying fully accessible.
Do extra repayments really make a difference?
Yes, and more than most people expect. Because interest compounds, money paid off early saves interest for the entire remaining life of the loan. Even an extra $100 to $200 a month can shave years off the term and save tens of thousands in interest. Use the calculator above to model your own figures.
Are fortnightly repayments better than monthly?
They can be, if you pay exactly half your monthly amount every fortnight. There are 26 fortnights in a year, so you make the equivalent of 13 monthly repayments instead of 12, one extra repayment a year. Check that your lender applies the payment to the loan immediately rather than holding it.
What is the difference between an offset account and a redraw facility?
Both reduce the interest you pay, but they work differently. An offset keeps your money in a separate linked account you can access any time. A redraw lets you pull back extra repayments you have already made into the loan, but some lenders cap redraw amounts, charge fees, or delay access. Offsets usually offer more flexibility.
How can paying off my home loan faster help me invest in property?
As you pay down your home loan or build up your offset, you build usable equity. Many investors use that equity as the deposit for their first investment property instead of saving a cash deposit from scratch. Paying your home down faster brings that first purchase forward. See our guide on building a property portfolio for how this works.
Should I pay off my home loan or invest in property?
It is not always one or the other. A common approach is to build equity and offset on your home, then leverage that equity to buy an investment property while keeping the investment loan structured efficiently, often interest-only, to maximise cash flow and deductions. The right balance depends on your goals, cash flow, and risk tolerance. A property investment advisor can map it to your situation.
Does paying off my home loan faster improve my borrowing power?
It can. Lowering your owner-occupier debt and building equity improves your serviceability and gives you equity to draw on for an investment deposit. Rising rates have already reduced how much investors can borrow, so equity you have built becomes more valuable. Our borrowing capacity guide explains what is moving the numbers in 2026.