What a small extra repayment does over 30 years

The calculator's own example says most of it. A $400,000 loan at 5.50% over 30 years has a minimum repayment of $2,271 a month. Add $100 a month from year five and the loan finishes two years and one month early, saving about $30,660 in interest.

Start the same $100 from day one instead and it finishes two years and eleven months early, saving about $48,300. Make it $250 a month from day one and the loan is gone in 23 years and 9 months, with about $101,000 less interest paid.

Why the early years matter so much

Interest is charged on the balance, and the balance is biggest at the start. An extra $100 in year one removes $100 of principal that would otherwise have been charged interest for the next 29 years. The same $100 in year 25 removes principal that only had five years of interest left on it. That is the whole reason a small habit started early beats a big effort started late.

Extra repayments or an offset account?

Both save the same interest, dollar for dollar. The difference is access. Extra repayments made directly onto the loan can usually be taken back out through redraw, but the lender sets the rules and can change them. Money in a 100% offset account is a normal transaction balance you control. If your loan has an offset, put the extra there. If it does not, extra repayments are the next best thing.

Check before you start

Fixed-rate loans usually cap extra repayments, commonly at $10,000 a year, and charge break costs above the cap. Variable loans normally allow unlimited extras. If you are on a fixed rate, check your cap first, or wait until the fixed term ends.

Related tools: the Lump-Sum Repayment Calculator shows a one-off payment instead of a regular one, and the Effective Interest Rate Calculator shows the same money working in an offset.

Last updated: October 2026