Adding a fixed amount to every repayment shortens the loan and cuts the interest. This works out by how much.
The saving is larger than most people expect, because every extra dollar goes straight to the balance — and every dollar off the balance stops being charged interest for the entire remaining term.
Shows how paying more than the minimum each period shortens a home loan and cuts the interest paid.
Extra payment
The amount added to each scheduled repayment, at the same frequency. A one-off payment is a different question and has its own calculator.
Repayment frequency
The extra amount is applied at the same frequency as the repayment, so $200 monthly and $100 fortnightly are not the same annual contribution — $100 a fortnight is $2,600 a year against $2,400.
Two numbers matter: the time removed from the loan, and the interest not paid. They are the same fact stated two ways — the interest is saved precisely because the loan ends sooner.
The effect is heavily front-loaded. An extra repayment in the first years removes interest that would have been charged for decades; the identical amount in the final years removes interest for months. If you are deciding when to start, the answer is nearly always now rather than later at a larger amount.
The saving is also not linear in the extra amount. Doubling the extra payment more than doubles the time saved, because the shorter the loan gets, the faster the remaining balance falls.
Every figure below is computed by the same calculator on this page, from the inputs described. Nothing here is typed in by hand, so an example cannot disagree with the tool.
Around 5% more paid each month. Look at the years removed against that: the leverage between a small ongoing increase and the length of the loan is the whole point of the tool.
Two and a half times the extra payment, but the time saved is more than two and a half times greater. The relationship is not linear, and the direction it bends in is the one that favours paying more.
The scheduled repayment is computed from the original amount, rate and term. The extra amount is then added to each period and the balance is run forward until it reaches zero, which happens earlier than the original term.
Interest is accrued on the outstanding balance each period before the payment is applied, so an extra repayment reduces the balance the interest is charged on from the very next period onward.
The comparison is against the same loan with no extra payment, over the same starting term, at the same rate. Nothing else differs.
The extra amount never stops
It is paid every period until the loan clears. In practice extra repayments pause — a year of higher expenses, a change of job — and the saving falls accordingly.
The lender allows it without penalty
Variable-rate Australian loans generally do. Fixed-rate loans commonly cap extra repayments per year and charge a break cost above that, which would make this result unachievable as stated.
The repayment is not recalculated
Some lenders will reduce your minimum repayment when you are ahead. If yours does and you accept, the term saving disappears — the money stays in your pocket instead, which is a different outcome.
It does not compare against investing instead
Paying down a loan returns your interest rate, after tax, with certainty. Whether that beats another use of the money is a real question and not one this calculator answers.
Redraw availability is not modelled
Money paid into a loan is generally recoverable through redraw, but that is a lender policy that can change, and it is not the same as money in an offset account.
Works out the regular repayment on a home loan, and what it adds up to in interest over the full term.
Shows what a one-off extra repayment does to a home loan: the balance after it, the time saved and the interest avoided.
Estimates what holding a balance in a full offset account saves in interest, and how much sooner the loan closes if repayments stay the same.
Works out how long a loan takes to clear at a chosen repayment, and what it costs in interest along the way.
This calculator can be embedded on a business website, branded to match it, with a call to action that sends the enquiry to that business rather than collecting anything here.