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Extra repayments, what an extra $X/month does
Even small extra payments compound dramatically against a 30-year mortgage. See how much time and interest you cut by paying a bit more each month, or dropping in a one-off lump sum.
Paid on top of the scheduled minimum
e.g. tax return, bonus, inheritance, applied at month 1
Interest saved
$145,750
vs. paying only the scheduled minimum
Time saved
5y 1m
Loan paid off 61 months early
Scheduled monthly
$3,851
Effective monthly (with extras)
$4,151
The maths
Extra repayments go straight to principal. Every dollar of principal you pay early stops accruing interest for the remainder of the loan term, which is why $300/month extra on a 30-year loan can save you $100k+ in interest and shave off 6+ years.
Lump sums punch above their weight.A $20k tax return applied to year 1 saves more interest than the same $20k spread over 5 years of monthly extras, because it’s compounding for longer.
Watch for fees. Some fixed-rate loans cap or charge for extra repayments. Variable-rate loans almost always allow unlimited extras, sometimes via a free redraw facility.
Want a real number, not a ballpark?
These figures are estimates. A 30-min broker consult will run your specific scenario against the actual lender policies, no fees, no obligation.
Important: This calculator provides an estimate only and does not constitute credit advice. Actual rates, repayments, fees and approval are subject to lender policy and your individual circumstances. Comparison rates are based on a $150,000 loan over 25 years on a secured basis, see footer for the full disclaimer.
How much do extra repayments save?
Extra repayments save interest and shorten the loan, and the effect is larger the earlier you start. As a guide, on a $600,000 loan at 6% p.a. over 30 years, paying an extra $300 a month saves roughly $130,000 in interest and clears the loan around six years early.
When do extra repayments make the most difference?
Early. Interest is charged on the outstanding balance, which is highest at the start, so a dollar of extra principal in year one saves far more interest than the same dollar in year twenty. That is also why cutting the rate and adding extra repayments compound together: refinancing to a sharper rate on our cheapest rates page frees up cash that an extra repayment then puts straight onto principal.
Extra repayments or offset?
For an owner-occupier the interest saving is the same, so it comes down to access: an offset account keeps the money liquid and withdrawable, while extra repayments lock it into the loan (recoverable only via redraw, if the loan allows it). For an investment loan, favour offset, because extra repayments reduce the deductible balance while offset does not.
Extra repayment questions, answered
Are extra repayments worth it?
On a 30-year, $500,000 loan at 6%, an extra $200/month shaves about 5 years and over $80,000 of interest off the loan. The earlier in the loan you start, the bigger the impact, because the interest savings compound.
How much do extra repayments save?
It depends on the amount and how early you start. As a guide, on a $600,000 loan at 6% over 30 years, an extra $300 a month saves roughly $130,000 in interest and clears the loan around 6 years early. A one-off lump sum early in the loan (say a tax return or bonus) has an outsized effect because it removes interest that would otherwise compound for decades.
Can I make extra repayments on a fixed loan?
Most fixed-rate loans cap extra repayments at $10,000 to $20,000 per year, with break costs if you exceed the cap. Variable-rate loans almost always allow unlimited extra repayments and let you redraw the surplus later.
Is making extra repayments better than an offset?
Mathematically they're equivalent for owner-occupier loans; both reduce the interest charged. Offset wins on flexibility (the cash stays liquid and accessible). For investment loans, offset is usually preferred because it preserves the deductible loan balance while extra repayments reduce it.
Do extra repayments reduce my monthly amount?
By default, no, they shorten the loan term while the scheduled repayment stays the same. Most lenders will recast (lower) the monthly amount on request, but only after a portion of extra principal has been paid down.
Next: compare the same money in an offset account, check the cheapest rates to free up cash for extra repayments, or model your base repayment with the repayment calculator.