How much does an extra $100 per month save on a mortgage?

On a $500,000 loan at 6% over 25 years, an extra $100 per month saves approximately $51,000 in interest and cuts around 3 years off the loan. The exact savings depend on your interest rate, loan balance, and remaining term. Even small extra repayments compound significantly because each dollar of extra principal reduces interest for the entire remaining life of the loan.

Can I make extra repayments on a fixed rate home loan?

Most fixed rate home loans allow limited extra repayments, typically capped at $10,000 to $30,000 per year. Exceeding this cap usually triggers break costs, which can be substantial. Variable rate loans generally allow unlimited extra repayments without penalty. If you plan to make significant extra repayments, a variable rate or split loan may be more suitable. Always check your loan contract for the specific terms.

What is a redraw facility and can I access extra repayments?

A redraw facility lets you withdraw extra repayments you have made on your home loan. For example, if you have paid an extra $20,000 above your minimum repayments, you can redraw up to that amount. Most variable rate loans offer redraw for free or a small fee. However, not all loans include redraw, and some lenders may restrict or delay access. Redraw is different from an offset account — with redraw the money reduces your loan balance (saving interest), while an offset keeps funds in a separate account.

Is fortnightly repayment better than monthly for paying off a mortgage faster?

Yes. Paying fortnightly (half the monthly amount every two weeks) means you make 26 half-payments per year — equivalent to 13 monthly payments instead of 12. This extra payment each year reduces your loan term by several years and saves thousands in interest without changing your budget. On a $500,000 loan at 6% over 25 years, switching from monthly to fortnightly repayments can save around 3 years and over $40,000 in interest.

Is it better to make extra mortgage repayments or invest the money?

Extra mortgage repayments give you a guaranteed, tax-free return equal to your home loan interest rate. If your mortgage rate is 6%, extra repayments effectively earn you 6% risk-free — equivalent to roughly 8.7% pre-tax at the 32.5% marginal rate. Investing in shares has historically returned 8-10% per year, but with volatility and tax on gains. Extra repayments are generally better if your mortgage rate is high, you are risk-averse, or you have limited tax deductions. Investing may be better if you have a low mortgage rate, a long time horizon, and want to build wealth outside your home.

Extra Mortgage Repayment Calculator

See how extra repayments save you years and thousands in interest. Enter your loan details and extra amount to see the impact instantly. Compare different extra repayment amounts side by side.

Last verified: 1 July 2025

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General information and estimates only — not financial, tax, or legal advice. Always verify with a licensed adviser or the ATO.

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