How to pay off your home loan early: Single woman reveals how she cleared her first house aged 37 using the little-used offset mortgage

A woman has revealed how she paid off her first home at the age of 37 using a little-known mortgage scheme.

Giselle Whiteaker, 54, bought her first property in Australia in the late 90s, when she was just 25, and paid it off using an offset mortgage 12 years later.

An offset mortgage essentially links your savings account or, in some cases, your current account to your mortgage at the same bank.

When you make a payment on your mortgage, the amount is ‘offset’ against your savings account balance and interest is calculated on the difference between the two.

For example, if you have £200,000 and £20,000 in your linked savings account. You’ll only pay interest on the mortgage for £180,000.

Giselle told the Daily Mail: ‘I bought my first property when I was just 25 without much forethought.

‘It has been said that buying a property is a major investment that needs to be thoroughly researched and planned. I completely ignored this advice when I bought my first home.

‘Now that I’m 54, I’m a bit more financially cautious, but I managed to pay off the first mortgage early without compromising too much on my lifestyle, so perhaps that wasn’t a bad thing.

‘Although I am Australian, my real estate journey started in Japan in the late 90s, right after graduating from university.

Giselle bought her first home in Australia (pictured) when she was 25, after receiving a ‘small amount of money’ from a Japanese pension scheme.

‘I have been accepted into the Japan Exchange and Teaching Program (JET), an initiative run by the Japanese government where graduates of any discipline are placed in roles to promote international exchange across Japan.

‘On character building, I spent three years as an assistant English teacher and a local curiosity in Hokkaido, scoffed at ramen, learned to speak manageable Japanese and earned around £20k a year, which felt like a fortune to me.

‘When I left Japan to move to Korea, the stars aligned to give me a small sum of money, equivalent to about two months’ salary.

‘There has been a legal and bureaucratic shift over pensions, with the Japanese government officially allowing foreign residents to reclaim their pension contributions after leaving the country.

‘There I was, 25 years old, handed an unexpected bank balance. I’d like to say I thought long and hard about what to do with it, but that wouldn’t be entirely true.’

Before embarking on her next adventure, Giselle returned to Australia for two weeks, where her mother advised her to spend her newfound savings on a property.

He explained: ‘I spent two weeks at home between moving to Korea, where I would earn significantly less than in Japan but where it would be cheaper to live, and my mother pointed to the property ladder.

‘Observantly, I began to climb. I perused printed property listings – this was long before the rise of Zoopla and Rightmove, or indeed the internet – and found a one-bedroom, two-storey terraced cottage whose owner was involved in a property chain and needed a quick sale.

When Giselle moved to Korea, she gave her mother a Power of Attorney so she could complete the paperwork and find a tenant for the property.

Giselle bought the one-bedroom, two-storey terraced cottage whose owner was on a chain and needed a quick sale, and paid off her mortgage 12 years later

Whiteaker then bought his next property (pictured), which was also located in Australia and came with a price tag of £340,000.

‘They immediately accepted my mid-priced offer of £35,000 and I saved enough of my pension return and savings to cover the 10 per cent deposit and associated fees.

‘It was so tight that I refused to pay the banker’s £10 draft fee, withdraw the money in cash and personally drive them to the estate agent across the road.

‘Before I knew it, I owned my first home. Now I just had to pay for it.

‘When I told my bank I hoped to pay off my mortgage before the end of the term, they offered me an offset mortgage. These weren’t common, but the way they explained them made sense.’

‘I went to Korea and gave my mother Power of Attorney so she could complete the paperwork and find a tenant quickly before the property started costing me too much.’

Giselle then slowly began increasing the amount in her savings account, because the larger the balance, the greater the benefit of the offset mortgage. Unexpected windfall profits and any extra cash left over at the end of the month were transferred directly to its linked account.

‘I set repayments at a minimum, around £225 a month, but for the next two years, whenever I accumulated savings of £200 or more, I transferred the funds into the offset account. Rental income above the mortgage repayment amount (less than £100 per month) was also offset.

‘I didn’t make any big purchases after that. The house was like that. The fact that the cost of living in Korea is quite low also helped this.

‘I had a second-hand scooter instead of a car, which was cheaper to run. I cooked at home most of the time, packed my lunches for work, and ate cheap street food when I was out. I found ways to travel cheaply and had a whole new, low-cost country to explore.

‘After Korea, my partner and I moved to this property for a few years. He had his own house and mortgage in Glasgow, so before we moved in together we had a glass of wine and discussed how to do this fairly.

We agreed to keep our finances separate and treat my property as rent for as long as we reside there, splitting the household bills and paying a “rent” slightly below the agreed-upon market value.

‘It was a win-win situation: it was cheaper than paying rent elsewhere, cheaper for me than paying rent alone, and all the while my mortgage was getting lower and lower.

‘We planned to work abroad again at some point, so I bought the furniture with the idea that it could remain in the property when we left and give me the potential for higher rental income with a furnished property.

‘That wasn’t exactly the case; A few years later we went our separate ways amicably. There was no arguing about who owned what, and that was a win in itself. I went back to Japan, then went to Dubai, my income increased exponentially, which meant more money being written off.

‘In 12 years, nine of which I spent abroad, the offset covered the mortgage balance leaving less than £150 in debt.

‘I was paying a small amount of interest because the monthly repayments came from balanced savings.

‘The mortgage was actually paid off; I could pay off the mortgage and take full ownership at age 37.

‘I chose not to. Instead, I kept it as a single-person financial support plan, knowing that I could offset nearly a decade’s worth of savings if I kept the account open. This gave me freedom.

‘He was there when I was laid off in Dubai in 2009 during the Global Financial Crisis. It was there when I worked part-time and traveled for five months between visas. It was there when I went back to studying and had a limited income.

‘After all, I never needed to delve into this topic. But I liked knowing I could do it.

‘About five years ago the time finally came. ‘I closed my loan account and became a mortgage-free homeowner.’

But it didn’t last long and almost 30 years after her first investment, Giselle bought her next property for £340,000.

He said: ‘There are probably smarter ways for financially savvy people to buy and finance property, but I’m not one of them.

‘I’m good at living within my means and saving as much as I can. So once again I have an offset mortgage. I’m sure I’ll pay it off early.

‘When my friends ask, and sometimes they don’t, I suggest they look at offset mortgages.

‘This may not be the most common way of financing a property, but for someone like me who isn’t financially savvy but wants to get out of debt as soon as possible, it’s worth considering.’