Extra Repayment Calculator Australia

Last updated: May 2026. Reflects current Australian metrics.

Find out how making additional payments can drastically reduce your loan term and save you thousands in interest. Perfect for variable rate loans with redraw facilities.

Current Loan Details

$
%
Yrs

Extra Repayments

$

Interest Saved

By making extra repayments

$0
Time Saved Off Loan 0 Yrs, 0 Mos

New payoff date will be significantly earlier.

Comparison

Standard Minimum Payment $0
Total Interest WITHOUT Extra $0
Total Interest WITH Extra $0

Making Extra Repayments in Australia

Adding just a little bit extra to your regular mortgage repayment can have a profound impact on the total interest you pay to the bank. Because interest is calculated daily on the outstanding principal, every dollar you overpay directly reduces the principal, which in turn reduces tomorrow's interest calculation.

Variable Rate Loans and Redraw Facilities

If you have an Australian variable rate home loan, you are generally allowed to make unlimited extra repayments. Most Big 4 banks (CBA, ANZ, NAB, Westpac) and non-banks also provide a redraw facility. This means if you put an extra $10,000 into the loan, reducing your balance, you can typically 'redraw' or withdraw that $10,000 later if you need it for an emergency, renovations, or a new car.

Prepayment Penalties on Fixed Loans

Be extremely careful if your home loan is on a fixed rate. Australian banks severely restrict extra repayments on fixed-rate periods. Most lenders cap extra repayments at a maximum of $10,000 per year during the fixed term. If you exceed this cap, you may be hit with massive break costs or prepayment penalties. Always check your loan contract before making a large lump sum payment on a fixed loan.

Offset Account vs Extra Repayments

While making extra repayments into a redraw facility saves you exactly the same amount of interest as putting that money into a 100% offset account, the Australian Tax Office (ATO) treats them differently if the property ever becomes an investment. Pulling money out of a redraw facility constitutes a 'new borrowing' for tax purposes, whereas pulling cash out of an offset account does not. If you plan to rent the property out in the future, an offset account is usually the superior choice.

Related Calculators

Mortgage Calculator Borrowing Power Stamp Duty

For more information on purchasing property, visit ASIC MoneySmart Home Loans.

10 Frequently Asked Questions

1. What is the current RBA cash rate?
As of 2026, the RBA cash rate influences all variable home loans. Check the official RBA website for the exact daily rate, but currently, variable rates sit around the low 6% mark.
2. How does the 3% serviceability buffer work?
APRA mandates that banks assess your ability to repay a loan at an interest rate 3% higher than the rate you are applying for. This ensures you can handle future rate hikes.
3. What is Lenders Mortgage Insurance (LMI)?
LMI is insurance that protects the lender if you default. It is usually required if your deposit is less than 20% of the property's value (LVR > 80%).
4. Should I choose a fixed or variable rate?
A variable rate offers flexibility (like offset accounts), while a fixed rate provides repayment certainty for a set period (usually 1-5 years).
5. What is a Comparison Rate?
Required by Australian law, the comparison rate rolls the interest rate and most fees into a single percentage to show the true cost of a loan.
6. What is an offset account?
An offset account is a savings account linked to your loan. Its balance is subtracted from your loan principal before interest is calculated, saving you money.
7. Can I make extra repayments?
Yes, most variable loans allow unlimited extra repayments. Fixed loans usually cap extra repayments (e.g., $10k/year) and charge break fees if exceeded.
8. What is negative gearing?
Negative gearing is an Australian tax strategy where the costs of owning an investment property exceed its rental income, allowing you to deduct the loss from your taxable income.
9. What are stamp duty concessions?
Each Australian state offers stamp duty exemptions or concessions for First Home Buyers purchasing below a certain price threshold.
10. How is interest calculated?
In Australia, home loan interest is generally calculated daily on your outstanding balance and charged monthly.