Extra mortgage repayments: what they actually save you

In the early years of a home loan, most of each repayment goes to interest rather than to the balance you owe. That's why an extra $100 a month has an effect out of all proportion to its size — and why the difference between two households with identical loans can run to hundreds of thousands of dollars.

Here's exactly what those numbers look like, on one loan, at ten different levels of extra repayment. You can then run the same sums on your own loan with the calculator further down.

The loan we're using

Example assumptions

• Loan amount: $600,000
• Term: 30 years
• Interest rate: 6.10% p.a., fixed for the whole term
• Scheduled monthly repayment: $3,636
• Total interest over 30 years, with no extra repayments: $708,949

Both figures are deliberately on the conservative side. The average new owner-occupier loan in the June 2026 quarter was $731,000 (ABS), and the average variable owner-occupier rate in August 2026 was around 6.92% (Finder). On a bigger loan at a higher rate, every number below gets larger.

Note the last line especially. Over a full 30-year term at this rate, the interest on a $600,000 loan is more than the loan itself.

What each extra $100 a month does

Every row below is the same loan, with the only change being the extra amount added to each monthly repayment from day one.

The returns don't scale evenly, and that's the interesting part. Going from $0 to $100 buys 25 months. Going from $900 to $1,000 buys 9. Early dollars do the most work, because they come off the balance while the balance — and therefore the daily interest — is at its largest.

Why such small amounts move such large numbers

Interest is charged on what you currently owe, not on what you originally borrowed. Every dollar that comes off the balance stops being charged interest for the entire remaining life of the loan.

A $100 extra repayment made in year one of a 30-year loan isn't just $100 off the balance. It's $100 that avoids 29 more years of compounding at 6.10% — about $500 of interest that never gets charged. Do it every month and the effect stacks, which is why the interest saved in the table is always far larger than the extra money put in.

It's the same compounding that works for you in an investment account, running in the opposite direction. On a mortgage, it's working against you until you shorten the runway.

The fortnightly switch

There's a version of this that costs nothing extra to set up and requires no change in the monthly amount you think of yourself as paying.

A year has 12 months but 26 fortnights. If you pay half your monthly repayment every fortnight, you make the equivalent of 13 monthly repayments a year instead of 12 — one extra repayment, arriving as a rounding artefact of the calendar rather than as a decision you have to make every month. ASIC's MoneySmart describes the same mechanic.

On our $600,000 example, half of $3,636 is $1,818 a fortnight:

$3,636 a year — one extra monthly repayment — buys 5 years and 6 months. Worth checking two things with your lender first: that they'll accept fortnightly repayments, and that they credit them as they're received rather than holding them and applying a monthly total.

What changes the answer

The table above is a clean model. Real loans have edges, and these are the ones that matter most:

Fixed-rate loans often cap extra repayments

Many fixed-rate products limit extra repayments to a set amount each year, with break costs beyond it. Variable loans generally allow unlimited extra repayments. Check your loan contract before setting up an ongoing extra amount.

Your rate probably won't stay still

The example holds 6.10% for 30 years, which no variable loan does. The RBA left the cash rate at 4.35% on 11 August 2026 after three rises earlier in the year. When rates move, your repayment or your term moves with them — which is a good reason to re-run the numbers rather than set and forget.

An offset account does something similar, differently

Money in an offset account reduces the balance interest is charged on, without being paid onto the loan. On a $500,000 loan with $20,000 offset, interest is charged on $480,000. Unlike an extra repayment, the money stays available. Some lenders charge a package fee for the feature.

Redraw depends on your lender

Extra repayments on a variable loan can often be redrawn, but lenders set their own conditions on redraw and can change them.

Fees and the lender's method

Ongoing fees, and whether your lender calculates interest daily or on a monthly balance, will both shift the result slightly from any calculator's model.

Run it on your own loan

Download the Wealthra Home Loan Repayment Calculator — a free spreadsheet, no email required.

Enter your loan amount, rate, term and repayment frequency, then change one cell — the extra amount — and see your own version of the table above. It shows the full repayment schedule, your balance falling over time, and the difference between monthly, fortnightly and weekly repayments.

Seeing it against everything else

A spreadsheet answers one question at a point in time. The harder question is what an extra repayment does to the rest of your month — and whether the amount you modelled is actually the amount leaving your account.

Wealthra connects your home loan alongside your bank accounts, cards and investments through Australia's Open Banking framework, so the balance in your projections is your real balance. From there:

• Mortgage scenario analysis models extra repayments, lump sums and rate changes against your actual loan, and the amortisation report includes offset account modelling.
• Cash flow forecasting projects the effect of a higher repayment across 12 months to 30 years, with best, base and worst-case scenarios.
• Goals and scheduled transfers track a mortgage or debt payoff target, and match your scheduled extra repayment against the transaction that actually happened.
• Net worth tracking takes a daily snapshot, so a falling loan balance shows up as a rising position rather than as a number you have to go looking for.

Related reading: what a rate rise does to a household budget, and why transfers between your own accounts break most budgets.

Common questions

Does paying extra reduce my repayment or my loan term?

By default, most lenders keep the repayment the same and shorten the term — which is what produces the time savings in the table. Some lenders will instead recalculate the repayment down and leave the term unchanged, which saves far less interest. It's worth confirming which one your lender does.

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

On a $600,000 loan at 6.10% over 30 years, an extra $100 a month reduces total interest by about $60,000 and shortens the loan by 2 years and 1 month. The saving scales with your loan size and rate, so a larger or more expensive loan saves more.

What happens if I switch from monthly to fortnightly repayments?

Paying half your monthly amount every fortnight means 26 half-payments a year, equal to 13 monthly repayments rather than 12. On the example loan that's about $154,000 less interest and 5 years 6 months off the term. Check that your lender accepts fortnightly repayments and applies them as received.

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

Usually only up to an annual cap set in your loan contract, with break costs beyond it. Variable-rate loans typically have no cap. The terms vary by lender and product.

Can I access extra repayments again if I need them?

On many variable loans, extra repayments sit in a redraw facility you can draw back on, subject to the lender's conditions — which lenders can change. Money held in an offset account instead stays in a normal transaction account you control.

The short version

• On a $600,000 loan at 6.10% over 30 years, total interest is $708,949 — more than the amount borrowed.
• An extra $100 a month removes $60,000 of interest and 2 yr 1 mth. An extra $500 removes $218,000 and 8 years.
• Switching from monthly to fortnightly repayments — the same money, differently timed — removes $154,000 and 5 yr 6 mth.
• Early repayments do the most work, because interest is charged on the balance that's left.
• Fixed-rate caps, fees, offset accounts and rate movements all change the real-world result.