Paying a little extra off your home loan each month is one of the most reliable ways to build wealth. Because every extra dollar reduces your balance, you save interest on it for the rest of the loan.
Here's what it can add up to.
The numbers
Loan: $600,000, 30 years, 6.49%, minimum repayment about $3,788 a month.
| Extra each month | Interest saved | Time saved |
|---|---|---|
| $100 | about $67,000 | about 2 years 2 months |
| $200 | about $122,000 | about 4 years |
| $500 | about $240,000 | about 8 years |
These assume the rate stays at 6.49% and you keep making the extra payment.
Why it works
Early in a loan, most of your repayment goes to interest. Extra repayments go straight to principal, so the next month's interest is calculated on a smaller balance. The effect compounds over time.
Easy ways to pay extra
Pay fortnightly
Pay half your monthly repayment every fortnight. There are 26 fortnights in a year, so you make the equivalent of 13 monthly payments instead of 12. On the loan above, that could cut the loan to about 24 years. See weekly, fortnightly or monthly repayments.
Keep paying the old amount after a rate cut
When rates eventually fall, keep your repayment the same.
Round up
Round your repayment to the next $100.
Put windfalls in
Tax refunds, bonuses and gifts go further against your loan than almost anywhere else.
Extra repayments or offset?
They save the same interest. The difference is access and tax:
- Offset: money stays in a separate account, easy to access, better if the home might become an investment
- Redraw: money is in the loan, may be harder to access and can create tax problems if the home becomes an investment
See offset vs redraw.
Fixed rate limits
Most fixed loans cap extra repayments, often at $10,000 to $20,000 a year. Going over can trigger break costs.
When extra repayments aren't the best move
- You have high-interest debt. Pay off credit cards and personal loans first.
- You have no emergency fund. Build a buffer first, ideally in an offset.
- You're missing out on employer super matching or other high-value opportunities.
- The extra repayments are on an investment loan while you still have a non-deductible home loan.
Frequently asked questions
Can I get extra repayments back?
On most variable loans, yes, via redraw. Check your lender's rules.
Do extra repayments reduce my required repayment?
Usually not. You pay the loan off faster instead. Some lenders let you recalculate a lower repayment on request.
Are there fees for extra repayments?
Not usually on variable loans.
Want to see how fast you could be mortgage-free? Call Finfident on 0424 545 654 and we'll map it out.
This article is general information only and doesn't take into account your objectives, financial situation or needs. Figures, rates and scheme rules are current as at October 2026 and can change. Finfident Finance Brokers (ABN 94 679 280 801) is Credit Representative 569374 of Outsource Financial Pty Ltd (ACN 131 090 705), Australian Credit Licence 384324.