Extra Repayments — How Much
Could They Save You?
How even small extra repayments can take years off your mortgage and save tens of thousands in interest.
How much can extra repayments save? Even modest extra repayments can make a significant difference. An extra $200 per month on a $500,000 loan at 6 per cent could save approximately $80,000 in interest and cut 5 years off a 30-year term. The key is consistency — regular small amounts add up substantially over time.
How extra repayments work
When you make extra repayments above your minimum required amount, the additional money goes directly to reducing your loan principal. Because interest is calculated on the outstanding balance, reducing the principal means you pay less interest on every subsequent repayment. This creates a compounding effect — each extra payment reduces both the total interest you pay and the time it takes to pay off the loan.
The impact of small amounts
You do not need to make large lump-sum payments to see results. Consistently adding $100, $200, or $500 per month to your repayments can save tens of thousands of dollars over the life of the loan. The earlier you start making extra repayments, the greater the benefit — because you have more time for the compounding effect to work.
Example
Loan: $500,000 | Rate: 6% p.a. | Term: 30 years (P&I)
+$200/month = ~$80,000 saved
Loan paid off approximately 5 years early
Estimate based on consistent extra repayments of $200/month from day one, applied to a $500,000 principal and interest loan at 6% p.a. over 30 years. Actual savings depend on your loan terms, rate changes, and when extra repayments begin. This is not financial advice.
Check your loan allows it
Variable rate loans almost always allow unlimited extra repayments. Fixed rate loans often limit extra repayments to $10,000 to $30,000 per year during the fixed period — check your loan contract. Any extra repayments on a variable loan can usually be redrawn if needed (see our offset vs redraw guide).
Read our complete home loans guide for more on loan features and strategies.
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