Extra Repayments Calculator

The tool takes your loan, adds the extra amount you nominate to each repayment, and shows two things: how much less interest you pay across the life of the loan, and how much earlier it clears.

Why a small extra payment does so much

An extra repayment goes entirely to principal. Because interest is charged on the balance, every dollar taken off the balance today removes the interest that dollar would have attracted for the rest of the term. The saving compounds quietly for years.

Timing matters more than size

The same extra amount is worth far more in year two than in year twenty, because it has more years left to save interest across. If you are choosing between starting small now and starting larger later, starting now usually wins.

• The interest rate holds for the whole term.
• The extra amount is paid every period, without a gap, until the loan clears.
• Extra payments are applied to principal immediately rather than held.
• The lender permits extra repayments in that amount without penalty.
• You do not redraw the extra payments later.
• No fees are charged on the additional payments.

The last two are where projections and reality most often part company. Money paid into a loan and later redrawn produces a smaller saving than the model shows, because the balance went back up in between.

• Caps on extra repayments during a fixed rate period, and break costs if the cap is exceeded.
• Fees some lenders charge on additional payments or on early payout.
• The value of keeping that money accessible instead.
• Whether another debt is costing you more. Paying extra on a mortgage while carrying a credit card balance is usually the wrong order.
• Tax treatment where the loan relates to an investment or a business, which is a question for a registered tax agent.
• What the same money would do in an offset account, which keeps it available while reducing interest in a similar way.

Before directing spare cash at the mortgage, make sure there is an accessible buffer for a bad month. A loan paid down aggressively with no cash reserve is a fragile position, and redraw is not always guaranteed to be available when you need it.

1. 01Check your loan contract for extra repayment limits and any fees.
2. 02Build an accessible buffer before you accelerate the mortgage.
3. 03Pay down the highest-rate debt first unless there is a good reason not to.
4. 04Set the extra amount up as an automatic transfer, so it happens without a decision each month.
5. 05Compare the same money sitting in an offset account, and choose deliberately between the two.

If several debts are competing for the same spare cash, the debt consolidation calculator will show you what one repayment would look like instead.