Extra Repayment Calculator

What this tells you

Put in what you still owe, your rate, how many years are left, and an amount you could realistically add each repayment. The calculator shows two futures side by side: the loan as it stands, and the same loan with the extra money going in. The gap between them is what the extra repayments are worth.

Two numbers matter. The interest you avoid, and the time you cut off the end of the loan. Both come from the same thing: every extra dollar reduces the balance the bank charges interest on, for every year that is left.

An example worth knowing

Take $550,000 owing at 6.10% with 28 years to run. The repayment is about $3,418 a month, and over the full term you hand the bank roughly $598,000 in interest on top of the money you borrowed.

Add $200 a month, which is about $46 a week, and the loan finishes in 24 years and 5 months instead of 28. You save around $91,000 in interest. Add $500 a month and you are done in about 20 and a half years, saving roughly $182,000.

None of that requires a better rate, a windfall, or a change of lender. It is the same loan with a slightly larger direct debit.

Why the early years matter most

On a new loan, most of each repayment is interest and only a small slice touches the balance. That is why the first few years feel like nothing is happening. An extra payment made in year two removes a dollar of debt that would otherwise have been charged interest for another twenty-six years. The same payment made in year twenty-five saves you almost nothing.

If you are going to do this, doing it now is worth far more than doing it well.

Before you start paying extra

• Check your loan allows it. Variable loans almost always do. Fixed loans usually cap extra repayments, often at $10,000 a year, with a break cost if you go over.
• Ask whether you can get it back. Money paid into a redraw facility can usually be pulled back out. Money that simply reduces the balance sometimes cannot. If it is your only savings, that difference matters.
• Compare it to an offset account. Cash sitting in an offset reduces the interest you are charged by the same maths, while staying yours to spend. For most people that is the safer version of the same idea.
• Clear expensive debt first. A credit card at 20% or a personal loan at 12% costs more than a mortgage at 6%. Extra money goes there first.

The lever most people ignore

Paying extra is one way to cut interest. Cutting the rate is the other, and it costs you nothing out of pocket. On $550,000 over 28 years, dropping the rate from 6.10% to 5.85% saves a similar amount to paying $100 a month extra for the life of the loan.

The two stack. A better rate plus keeping your old repayment amount is the fastest way there is to shorten a mortgage, because the whole difference goes straight onto the balance.

Questions people ask

Should I pay extra or put it in the offset?

Financially they are close to identical. Practically, an offset keeps the money available if you need it, and extra repayments do not always. If you are the kind of person who will spend what is visible, extra repayments have the advantage of being harder to undo.

Does switching to fortnightly repayments really help?

Yes, if you halve the monthly amount and pay it every fortnight. There are 26 fortnights in a year, so you end up making the equivalent of 13 monthly payments instead of 12 without really noticing. Set the calculator to fortnightly to see it.

Is it better to pay extra or invest the money?

Paying down a mortgage is a guaranteed, tax-free return equal to your interest rate. An investment might beat it, and might not. On a 6% loan you are effectively earning 6% risk free, which is a high bar.

Will my repayment drop if I pay extra?

Usually not automatically. Most lenders keep the repayment the same and let you finish early, which is the point. Some will recalculate it downwards if you ask, which cancels most of the benefit, so do not ask unless you need the breathing room.

What if I can only do it for a couple of years?

It still works. Extra repayments are not a commitment, and anything paid off early keeps saving interest for the rest of the loan even if you stop.

Work out the rest of the picture

To see what the repayment itself looks like, or what a rate rise would do to it, use our loan repayment calculator. If you are still deciding how much to borrow, the borrowing power calculator estimates what a lender might approve.