How much interest do extra repayments save?

Extra repayments save a disproportionate amount of interest because every dollar of extra principal paid reduces the balance on which future interest is calculated. For example, paying an extra $500/month on a $600,000 loan at 6.09% could save over $150,000 in interest and cut more than 8 years off the loan term.

What is the fastest way to pay off a mortgage?

The most effective strategies are: (1) Switch from monthly to fortnightly repayments — this adds one extra monthly payment per year; (2) Round up your repayments — if your minimum is $2,840, pay $3,000; (3) Redirect windfalls (tax returns, bonuses) directly to the loan; (4) Use an offset account to park all savings and income; (5) Refinance to a lower rate and keep repayments the same — the difference automatically reduces principal faster.

Extra Repayments Calculator 2026

Q: Is it better to make extra repayments or use an offset account?

Both achieve the same interest saving — they both reduce the balance on which interest is charged. The key difference is flexibility: offset account funds remain accessible, while extra repayments into the loan may be harder to redraw depending on your lender. If you might need the money, an offset account is generally the better choice. If you are disciplined and want to be mortgage-free sooner, direct extra repayments work just as well.

🏠 Your Loan

Current Loan Balance

Interest Rate % p.a.

Remaining Loan Term

yrs

⚡ Regular Extra Repayments

Extra amount per repayment (enter 0 if none)

Frequency

💰 One-Off Lump Sum (optional)

Lump sum amount (e.g. tax refund, bonus)

Paid in month number (from now)

Check your loan allows extra repayments without penalty — some fixed rate loans cap extra payments at $10,000/year.

Total Interest Saved

$—

Enter loan details to calculate your savings

Years Saved—

New Payoff Date—

Extra Paid/yr—

Before vs After Comparison

Metric

Without Extra

With Extra

Monthly repayment

—

Loan term

—

Total interest paid

—

Total amount paid

—

Interest saved

—

Loan Balance Over Time

How much faster your balance drops with extra repayments

Without extra With extra repayments

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How Much Can Extra Repayments Save?

These examples show the interest saved and years cut for a $550,000 loan at 6.09% p.a. with 25 years remaining.

Extra per Month	Interest Saved	Years Saved	New Loan Term
$100/month	~$28,000	~1.5 years	~23.5 years
$200/month	~$52,000	~2.8 years	~22.2 years
$500/month	~$107,000	~6.0 years	~19.0 years
$1,000/month	~$168,000	~10 years	~15 years
$2,000/month	~$225,000	~15 years	~10 years

Approximate figures only. Actual savings depend on exact balance, rate and payment timing. Use the calculator above for your specific situation.

Impact of Lump Sum Payments

A single lump sum payment made early in the loan life saves a disproportionately large amount — because the interest saving compounds over the remaining term.

Lump Sum	Paid in Year 1	Paid in Year 5	Paid in Year 10
$5,000	~$14,000 saved	~$10,500 saved	~$6,500 saved
$10,000	~$28,000 saved	~$21,000 saved	~$13,000 saved
$20,000	~$55,000 saved	~$41,000 saved	~$26,000 saved
$50,000	~$130,000 saved	~$97,000 saved	~$62,000 saved

Based on $550,000 loan at 6.09% p.a. with 25 years remaining. Paying early maximises the compound saving effect.

Extra Repayments FAQs

How much do extra repayments really save?+

Extra repayments save a disproportionately large amount because every extra dollar reduces the balance on which future interest is calculated — and that interest saving then compounds for the rest of the loan. For example, on a $550,000 loan at 6.09% with 25 years remaining, paying an extra $500/month saves approximately $107,000 in interest and cuts around 6 years off the loan. The earlier you start, the greater the impact.

Is it better to make extra repayments or use an offset account?+

Both achieve the same interest saving mathematically — they both reduce the balance on which interest is charged each day. The key difference is flexibility: offset account funds remain fully accessible at any time, while extra repayments may be harder to redraw (and some lenders charge redraw fees or can restrict access). If you might need the funds in the future, an offset account is the smarter choice. If you are confident you won't need the money back, direct extra repayments work equally well.

Can I make extra repayments on a fixed rate loan?+

Most fixed rate loans allow limited extra repayments — typically up to $10,000 per year without penalty. Exceeding this limit can trigger significant break costs. Variable rate loans generally allow unlimited extra repayments with no penalties. Before making large lump-sum payments on a fixed rate loan, check your contract or ask your broker. If your fixed rate period is ending soon, it may be worth waiting until you revert to variable before making a large extra payment. When you do switch, our Refinance Savings Calculator shows if a better rate is also available.

Does paying fortnightly instead of monthly help?+

Yes — switching from monthly to fortnightly repayments (where you pay half the monthly amount each fortnight) results in 26 half-payments per year, equivalent to 13 full monthly payments instead of 12. This single extra payment per year can save thousands in interest and shave 2–3 years off your loan with no real lifestyle impact. You can model this in the calculator by entering your monthly repayment halved, selected as fortnightly frequency.

Can I redraw extra repayments if I need the money back?+

Most variable rate home loans with a redraw facility allow you to access extra repayments you have made, subject to a minimum redraw amount (often $500–$1,000). However, redraw is not guaranteed — your lender controls the policy and can restrict or charge fees for redraws. If guaranteed access to your savings is important, an offset account is the safer option. Always confirm redraw conditions with your lender before making extra repayments.