Extra Mortgage Repayments Calculator
See how much time and interest you save by paying more than the minimum each month.
| Time Saved | — |
| New Monthly Repayment | $0 |
| Original Interest | $0 |
| New Payoff Year | — |
How extra repayments actually work
Your minimum repayment is set once, at the start, to clear the loan in exactly the original term. Interest is charged each month on whatever you still owe. So anything you pay above the minimum has no interest to cover — all of it comes off the principal, and every month afterwards the interest is charged on a smaller number.
That is the whole mechanism. No bonus rate, no compounding trick: the saving is simply interest that never gets charged. It is also why the effect snowballs — a smaller balance means less of next month's minimum goes to interest, so more of that minimum reduces the principal too, even if you never pay another extra dollar.
How it's calculated
The calculator above does three things. It works out your minimum repayment from the loan amount, rate and term. It runs the loan month by month at that minimum to get the total interest. Then it runs the same loan again with your extra added to every payment and stops when the balance hits zero. The gap between the two interest totals is the saving; the gap between the two run-times is the time saved.
Each month inside that loop is one line of arithmetic: interest = balance × (annual rate ÷ 12), and whatever is left of the payment comes off the balance.
A worked example
A $700,000 loan at 6.50% over 30 years, with an extra $300 a month:
- Monthly rate: 6.50% ÷ 12 = 0.5417%. Minimum repayment: $4,424 a month.
- In month one, $3,792 of that $4,424 is interest — 86% of the payment. Only $633 touches the loan.
- Paying the minimum for all 360 months costs $892,811 in interest. More than the loan itself.
- Adding $300 lifts the payment to $4,724 and clears the loan in 301 months instead of 360, with $718,829 of interest.
So the calculator returns Total Interest Saved $173,982, Time Saved 4y 11m, New Monthly Repayment $4,724 and a payoff year of 2052. Put another way: $90,300 of extra payments bought $173,982 of avoided interest.
What each extra amount is worth
Same $700,000 loan at 6.50% over 30 years — only the extra changes.
| Extra per month | New repayment | Total interest | Interest saved | Time saved |
|---|---|---|---|---|
| $0 | $4,424 | $892,811 | — | — |
| $100 | $4,524 | $824,649 | $68,163 | 1y 11m |
| $200 | $4,624 | $767,557 | $125,254 | 3y 6m |
| $300 | $4,724 | $718,829 | $173,982 | 4y 11m |
| $500 | $4,924 | $639,603 | $253,208 | 7y 3m |
| $1,000 | $5,424 | $505,606 | $387,205 | 11y 5m |
Notice the shape. The first $100 a month buys $68,163 of avoided interest; going from $500 to $1,000 — five times as much money again — adds only another $133,997. Extra repayments have diminishing returns in absolute terms, because a loan you have already shortened has less interest left to avoid.
Why the first years are worth more than the last
A dollar off the balance in year one avoids nearly thirty years of interest on that dollar. The same dollar in year twenty-six avoids about five. It is the same fact seen from the other side as the worked example above: 86% of the first repayment on this loan is interest, and almost none of the last one is. Which makes when you start matter more than most people expect.
Same loan, same $300 a month, kept up until the loan clears. Only the start date moves.
| Extra starts | Extra paid in total | Interest saved | Saved per $1 of extra | Time saved |
|---|---|---|---|---|
| Year 1 | $90,300 | $173,982 | $1.93 | 4y 11m |
| Year 6 | $77,400 | $110,429 | $1.43 | 3y 6m |
| Year 11 | $63,600 | $64,324 | $1.01 | 2y 4m |
| Year 16 | $48,600 | $32,848 | $0.68 | 1y 6m |
| Year 21 | $33,000 | $13,242 | $0.40 | 10m |
Every extra dollar paid in the first year returns $1.93 of avoided interest. The same dollar paid in year twenty-one returns 40 cents. Nothing about the loan changed — only the number of years that dollar had left to work.
The fixed-rate trap
Variable loans generally accept unlimited extra repayments. Fixed loans usually do not. Most fixed contracts cap what you can pay above the minimum in a year, and going over the cap can trigger an early repayment cost.
There is no legislated cap — it is whatever your contract says, and caps somewhere between $10,000 and $30,000 a year are common. ASIC's Moneysmart puts the principle plainly: with a fixed rate loan you may not be able to make extra payments, and breaking a fixed rate can attract a break fee that may be very high.
Break costs are not a flat penalty. They exist because the lender funded your fixed rate in the wholesale market, so the charge tracks how far wholesale rates have fallen below your fixed rate and how long the fixed term has left to run. If rates have risen since you fixed, most lenders charge nothing at all. The break cost calculator estimates that gap before you ring the lender for the real figure.
Two things worth checking before you set up an automatic extra payment on a fixed loan: what the annual cap actually is in your contract, and whether the lender counts it per calendar year or per anniversary of the fixed period. Where most of the loan is fixed, one common approach is to point the extras at the variable portion of a split instead.
Redraw, offset, and the tax difference
Both park money against the loan, and both save the same interest dollar for dollar while the money is sitting there. The difference is where the money legally is.
| Extra repayments + redraw | Offset account | |
|---|---|---|
| Loan balance | Actually reduced | Unchanged |
| Interest saved | Same, dollar for dollar | Same, dollar for dollar |
| Access to the money | Redraw facility — a lender can limit it, charge for it or withdraw it | Everyday account access |
| Taking the money back out | A new borrowing for tax purposes | Not a borrowing — the loan never changed |
| If the home later becomes a rental | Past redraws can cut future deductibility | Deductible interest is unaffected |
That last row is the one that catches people. The ATO treats a redraw as a fresh borrowing, and deductibility depends on what the redrawn money is spent on — not on what secures it. Redraw $80,000 for a car, then move out and rent the place, and that $80,000 slice of the loan is a car loan for tax purposes: the interest on it is not deductible, and the loan becomes a mixed-purpose account whose interest has to be apportioned every year afterwards.
Money in an offset was never repaid into the loan, so spending it changes nothing about the loan's purpose. Where there is any chance the home will one day be rented out, that distinction is worth understanding before the extra money goes anywhere. The offset savings calculator models the interest side; the tax side is worth running past a registered tax agent, because apportioning a mixed-purpose loan is fiddly and hard to undo.
Extra repayments, or invest the money?
Paying down a mortgage returns exactly your loan rate — guaranteed, and untaxed, because you are avoiding a cost rather than earning income. An investment return is taxed. So the honest comparison is not 6.50% against a share market number; it is 6.50% against what an investment would have to earn before tax to match it.
| Taxable income (FY 2026–27) | Marginal rate + Medicare | Pre-tax return needed to match a 6.50% loan |
|---|---|---|
| $18,201 – $45,000 | 17% | 7.83% |
| $45,001 – $135,000 | 32% | 9.56% |
| $135,001 – $190,000 | 39% | 10.66% |
| Over $190,000 | 47% | 12.26% |
Two things pull the other way. Investment returns are not always taxed at the full marginal rate — the CGT discount on assets held longer than twelve months and franking credits on Australian shares both narrow the gap, and salary sacrificing into super is taxed differently again. And the mortgage return is certain in a way a market return is not.
Which is really the question: whether a guaranteed 6.50% suits you better than an uncertain double-digit return, given your timeframe and how you would feel about a bad decade. That is a personal call rather than an arithmetic one, but both sides are worth modelling — the super vs mortgage calculator runs the superannuation version of the same trade-off.
How lenders actually apply the extra
Most lenders credit anything above the minimum straight to principal, and the saving starts the next time interest is charged. A few details change the outcome, and they live in the loan contract rather than the marketing.
Your minimum repayment does not fall
Extra repayments shorten the loan; they do not reduce next month's minimum. Some lenders will recalculate the minimum downward on request, which converts the saving from a shorter loan into a smaller payment. Both are legitimate — they are just different things, and one of them quietly cancels the effect of the other. The repayment calculator shows what the minimum would become at a lower balance.
"Paid ahead" buffers
Many lenders count extras as being ahead on your schedule and will let you skip payments up to that buffer. Genuinely handy in a bad month — the RBA's March 2026 Financial Stability Review found median prepayment buffers sitting above pre-pandemic levels across every income quartile — but skipping spends the saving you built.
Timing within the month
Interest usually accrues daily and is charged monthly, so an extra paid early in the cycle saves slightly more than the same amount paid on the last day. Small, but free.
The fortnightly effect
Paying half the monthly repayment every fortnight means 26 half-payments a year — thirteen months' worth, not twelve. On the $700,000 example that is an extra $4,424 a year, about $369 a month, which lands between the $300 and $500 rows above and saves $203,718. It only works if your lender treats it as a genuine fortnightly schedule rather than holding half-payments and applying them monthly.