Extra Repayment Calculator

What is Extra Repayment?

An extra repayment calculator shows how much time and interest you can save by paying more than the minimum required repayment on your home loan.

How this calculator works

The calculator simulates your loan month by month, comparing standard repayments against your planned extra amount. Each month, interest accrues on the remaining balance, and both the standard payment and your extra payment reduce the principal. The time saved and interest saved figures show the dramatic impact of even small extra payments — for example, an extra $500/month on a $500,000 loan at 6.5% can save you over $200,000 in interest and cut nearly 10 years off a 30-year loan. You can also model a one-off lump sum payment.

Why Extra Repayments Have Outsized Impact

Standard mortgage amortisation front-loads interest — in year 1, ~85% of each payment goes to interest. Extra repayments hit principal directly, which permanently reduces the interest base for every future month. This is why $200 extra/month over 30 years saves vastly more than $200 × 360 = $72,000 — you're saving the COMPOUND effect on accumulated interest, often $100k+ on a $500k loan.

Extra Repayments vs Offset Account

Mathematically identical effect on interest charged. But: EXTRA REPAYMENTS reduce the loan principal permanently (need redraw to access), while OFFSET keeps cash liquid. Most savvy borrowers use offset for the emergency fund + 3-6 months expenses, then extra repayments for amounts they're confident they won't need back. Some lenders charge fees for redraw, making offset more flexible.

One-Off Lump Sums (Tax Refund, Bonus)

A $5k lump sum dropped on a $500k loan at year 5 saves ~$8,500 in total interest over the remaining 25 years and shaves several months off the loan. Higher-impact than splitting it into smaller monthly extras of equivalent total. Tax refunds, bonuses, and inheritances are powerful mortgage accelerators if you can resist spending them.

Weekly/Fortnightly vs Monthly Payments

Paying fortnightly (half your monthly amount every 2 weeks) results in 26 fortnightly payments per year = 13 monthly equivalents. The 'extra' payment per year amounts to ~$3k extra on a $500k loan, saving 4-5 years and ~$60k interest at typical rates. Many lenders default to monthly but allow switching to fortnightly without fees.

When Extra Repayments DON'T Make Sense

(1) Fixed-rate loans usually have caps (~$10-20k/yr) — exceeding triggers break costs. (2) Higher-yielding tax-advantaged investments (e.g. salary sacrifice into super at 15% vs 32% marginal rate) often beat 6% mortgage saving. (3) High-interest debts (credit cards 19-24%, personal loans 11-15%) should be cleared FIRST. (4) No emergency fund yet — build $5-10k buffer before aggressive mortgage paydown.

Tax Implications

Owner-occupier mortgage: interest savings are NOT taxable income (you're just paying less interest). Investment property loan: extra repayments REDUCE your tax-deductible interest, which can disadvantage high earners using negative gearing. Some investors deliberately keep investment loan balances high (interest-only + offset on owner-occupier) — this is debt recycling territory; get advice.

All calculations are performed in your browser — your data never leaves your device. Results are for general guidance only and should not be considered professional financial advice.

Built and maintained by Konstantin Iakovlev. Data sourced from the ATO and official Australian government sources.