Extra Repayment

What an extra repayment means

An extra repayment is money paid into a home loan above the minimum repayment required by the lender. It may be a larger regular payment or a one-off lump sum. When the lender applies it to principal, the lower balance generally reduces future interest and can shorten the loan term.

This is different from paying the same minimum amount more often. Paying half a monthly repayment every fortnight creates 26 half-payments in a year, equal to 13 monthly payments rather than 12. Check that the lender credits the payments as expected.

Worked constant-rate example

Consider a $500,000 principal-and-interest loan at 6% a year over 30 years, with monthly repayments and no fees or rate changes. The standard repayment is about $2,997.75 a month. In this simplified model, total interest is about $579,191.

Adding $200 to each monthly repayment repays the loan in about 306 months instead of 360. That is 54 months earlier, with modelled interest of about $476,046 — a reduction of about $103,145. These figures are illustrative and rounded. A lender's daily interest calculation, payment processing, rate changes and fees can change the outcome.

Use the Extra Repayments Calculator to test your own loan amount, rate, term, payment frequency, lump sum and offset balance. The result is a scenario, not a quote or a recommendation to use cash that may be needed elsewhere.

Check the loan rules first

ASIC Moneysmart says extra and lump-sum repayments can help pay a mortgage faster, particularly early in the loan, but borrowers should check whether their lender charges a fee. Fixed-rate loans may restrict or cap extra repayments, while variable-rate loans may offer more flexibility. Product terms determine whether an extra payment can later be accessed through redraw, how quickly it is credited and whether a redraw minimum or fee applies.

An offset account keeps money in a separate linked transaction account while reducing the balance used for interest calculations. A redraw facility may allow access to qualifying extra repayments. They can produce similar interest effects in a simple model, but access, fees, product rates and tax consequences can differ. Read Offset Account vs Redraw and compare any fee or rate premium with the Offset Account Break-Even Calculator.

Sources and limits

• ASIC Moneysmart: Pay off your mortgage faster, updated 22 July 2026.
• ASIC Moneysmart: Mortgage offset accounts, updated 28 July 2026.
• ASIC Moneysmart: Choosing a home loan, updated 29 July 2026.

This entry provides general information and simplified modelling only. It is not personal financial, credit or tax advice. Loan features, caps, fees, interest timing, redraw access and tax consequences depend on the product and how borrowed funds are used.

Last updated: 6 September 2026.