How extra mortgage repayments save thousands in interest
Because Australian mortgages calculate interest daily and charge it monthly, making extra repayments early in the loan term produces massive compounding savings. Every extra dollar paid directly reduces the loan principal, meaning less interest is charged the following month.
Even a modest extra payment of $200 per month on a typical $500,000 home loan at 6% interest can shave more than three years off a 25-year mortgage and save tens of thousands of dollars in interest. The effect is even greater when interest rates rise.
Utilising a 100% offset transaction account provides identical interest-saving benefits while keeping your emergency cash accessible. Money sitting in your offset account offsets the loan balance dollar-for-dollar without locking funds away.
Calculate extra repayment savings →