Does paying extra on my mortgage really help?

Yes. Every extra dollar goes straight onto the principal, so you stop paying interest on it for the rest of the loan. Because mortgages run for decades, even a small regular extra payment can save tens of thousands in interest and clear the loan years early.

Is it better to pay extra each payment or a lump sum?

Both help. Regular extra payments compound their savings over the whole term, while a lump sum makes a big one-off dent. Many people do both. Check your loan allows extra payments without a break fee, which can apply on fixed rates.

Can I be charged for paying extra?

On a floating rate you can usually pay as much extra as you like for free. On a fixed rate, lenders often allow a limited amount of extra each year, and going over it can trigger a break fee. Check your loan terms before increasing payments.

Mortgage Extra Repayment Calculator

See what paying a little extra on your mortgage does over the long run. Enter your loan balance, interest rate, remaining term, and the extra amount you can add each month. The calculator shows how much sooner you clear the loan and how much interest you save. On a long mortgage, small extra payments add up to a surprising amount.

Loan balance

Interest rate

Years remaining

Extra per month

interest saved

Time saved0

New payoff0

New monthly payment$0

Why extra repayments work so well

A mortgage charges interest on the balance owing. Any extra you pay comes straight off the principal, so you never pay interest on that money again for the rest of the loan. Because the loan runs for decades, the saving compounds and a modest regular extra can take years off the term.

Worked example

On a $500,000 loan at 6.5% with 25 years to run, the normal payment is about $3,375 a month. Adding $200 a month clears the loan around 3 years early and saves roughly $90,000 in interest, because that extra principal stops accruing interest for the whole remaining term.

Tips

Round your payment up to the nearest hundred to make extra payments painless.
Direct pay rises and bonuses at the mortgage while you can.
On a fixed rate, check how much extra you can pay before a break fee applies.

Related calculators

Mortgage Lump Sum Impact Calculator: effect of a one-off payment.
Mortgage Offset Calculator: savings used to offset interest.
Mortgage Repayment Calculator: standard repayments.
Mortgage Calculator: full mortgage breakdown.

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