Extra Repayment Impact Calculator

Extra repayments dramatically reduce interest and loan term. On a $500,000 loan at 6.5% over 30 years: No extra repayments: $637,720 interest, 30 years. $200/month extra: $443,392 interest (save $194,328), 23 years (-7 years). $500/month extra: $329,184 interest (save $308,536), 18 years (-12 years). $1,000/month extra: $216,744 interest (save $420,976), 14 years (-16 years). Even $100/month extra saves $97,000+ interest. The earlier you start, the greater the impact - $200/month from year 1 saves $194K; starting year 10 saves only $112K.

Most effective strategies: 1) Consistent small amounts beat sporadic large payments - $200/month consistently better than $2,400 once/year. 2) Start immediately - first 10 years generate most impact due to compound interest. 3) Use offset account if available - maintains flexibility while reducing interest. 4) Pay fortnightly instead of monthly - sneaks in extra month's payment annually. 5) Redirect windfalls (tax refunds, bonuses) - $10,000 annual windfall saves $150,000+ over loan life. 6) Round up repayments - pay $3,200 instead of $3,160 minimum. Most borrowers find $200-$500/month extra sustainable while delivering $200,000-$400,000 savings.

Yes, but with limitations. Most fixed rate loans allow $10,000-$30,000 in extra repayments per year without penalties (varies by lender). Example: $500,000 fixed loan typically allows $10,000 extra annually ($833/month). Exceeding limit triggers break costs, calculated as the lender's lost interest revenue - can be $5,000-$50,000 depending on remaining fixed term and rate differentials. Variable rate loans have no extra repayment limits. Strategy: If fixed, make maximum allowed extra repayments ($10K-$30K/year) then switch to variable after fixed period ends to accelerate repayments. Or use offset account to "park" extra funds without exceeding limit.

Offset accounts provide identical interest savings with more flexibility. Comparison on $500,000 loan at 6.5%: Extra $50,000 in repayments: Reduces principal to $450,000, saves $3,250/year interest, but money is locked in loan. $50,000 in offset account: Reduces interest charged on $50,000, saves $3,250/year interest, but can withdraw for emergencies. Both achieve same interest reduction. Choose offset if: you want flexibility, irregular income, or may need funds for renovations/emergencies. Choose extra repayments if: no offset account available, want forced discipline, or reducing principal gives psychological benefit. Most borrowers prefer offset for flexibility - maintains full loan balance for tax deductibility (investment properties) while reducing interest.

Compare guaranteed loan interest savings vs uncertain investment returns. Example: $1,000/month extra repayment options: Option A (Extra repayments): Saves 6.5% interest guaranteed, tax-free. Effective return: 6.5%-11% (depending on tax bracket - interest isn't tax deductible). Option B (Invest in shares): Average 8-10% return but taxed at marginal rate (37-45%), includes CGT. Net after-tax return: ~5.5%-6.5%. Risk: market volatility, potential losses. Decision framework: If loan rate >6.5%, prioritize extra repayments (guaranteed return). If loan rate <5%, consider investing (higher growth potential). If cashflow tight, build 3-month emergency fund first, then split 50/50. Most financial planners recommend: clear non-deductible debt first (home loan), then invest in tax-advantaged super.

No, extra repayments reduce loan term and interest, but minimum monthly payment usually stays the same. Example: $500,000 at 6.5%, minimum repayment $3,160/month. After 5 years of $500 extra/month: Balance reduced to $422,000 (instead of $462,000). Monthly minimum still $3,160, not recalculated. Some lenders offer "recast" or "re-amortization" after significant lump sum payments, recalculating minimum to lower amount (fees apply, $250-$500). Alternative: refinance to lower monthly payment after making extra repayments. Most borrowers prefer keeping higher payment to continue reducing principal faster, or redirect "extra" funds to investments once comfortable with loan progress.

Amount depends on current loan balance, rate, and remaining term. For a $500,000 loan at 6.5%: To pay off in 20 years instead of 30: Need $3,775/month (vs $3,160 minimum) = $615 extra/month. To pay off in 15 years: Need $4,378/month = $1,218 extra/month. For a $750,000 loan at 6.5%: To pay off in 20 years instead of 30: Need $5,663/month (vs $4,740 minimum) = $923 extra/month. General rule: reducing term by 10 years requires 20-35% higher monthly repayments depending on starting point. Use calculator above to model your specific scenario. Even 10% extra ($316/month on $3,160 payment) cuts 6 years off loan term.

Extra repayments permanently reduce your loan balance - this doesn't change when refinancing. Example: Original loan $500,000, made $100,000 in extra repayments over 5 years. Balance now $362,000 (instead of $462,000 without extra payments). When refinancing, you refinance the $362,000 balance, not the original $500,000. Your $100,000 extra repayments are reflected in lower balance. New lender won't "owe" you the $100K separately - it's gone toward principal. If using redraw facility, ensure you redraw any needed funds BEFORE refinancing (may lose access). If using offset account, money stays yours - transfer to new offset account with new lender. Key: extra repayments are permanent principal reductions, not recoverable unless explicitly in redraw.