See how extra repayments cut years and interest off your loan.
An extra repayment reduces the balance immediately, and interest from that point is charged on the smaller amount. The saving is not the extra payment itself but every future interest charge it prevents. That is why a modest amount paid consistently from early in a loan can take years off the term, while the same total paid in the final years barely moves it.
On a loan with an offset account, money held in offset produces the same interest effect as an extra repayment while staying accessible. On a loan without one, an extra repayment plus redraw is the nearest equivalent, though redraw terms vary and can be changed by the lender. If you may need the money back, check which structure you are in before committing it.
Most fixed-rate loans cap how much extra you can repay in a year, and exceeding the cap can trigger a break cost. If you are on a fixed rate, check the annual limit in your contract before setting up extra repayments.
A calculator gives you a starting figure. What a lender will actually approve depends on your income, expenses, credit history and the property, and it varies between lenders. We compare more than 40 lenders on our panel and will tell you where you genuinely stand — see our home loan, refinancing and car loan services, or the suburb pages for Werribee, Tarneit and Point Cook.
It depends on your rate, your tax position and whether you need access to the funds. Because a loan repayment is an after-tax saving, the comparison is rarely as simple as comparing two rates.
Usually through redraw, if the loan has it. Terms differ between lenders and can change, so confirm the redraw conditions on your specific loan.
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