Even small extra payments compound dramatically over time. See exactly how many years you'll cut off your loan and how much interest you'll save.
Extra repayments work because they go directly to reducing your principal — which means less interest is charged on your remaining balance every month going forward. The earlier in your loan term you make extra payments, the greater the compounding benefit.
Some examples on a $500,000 loan at 6.5% over 28 years:
| Extra/Month | Years Saved | Interest Saved |
|---|---|---|
| $100 | ~3.5 years | ~$75,000 |
| $200 | ~6 years | ~$130,000 |
| $500 | ~11 years | ~$240,000 |
Check your loan terms: Most variable rate loans allow unlimited extra repayments with full redraw. Fixed rate loans often cap extra repayments at $10,000-$30,000 per year. Check with your lender before committing to a regular extra payment schedule on a fixed loan.
Common strategies that Australian households use to free up extra repayment money: reviewing insurance policies annually (home, car, health — switching can save $500-1,500/year), cancelling unused subscriptions, meal planning to reduce grocery waste, switching energy providers (comparison sites like Energy Made Easy), and directing tax refunds or work bonuses directly to the mortgage.
Before adding extra repayments, make sure your current repayments are sustainable.
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