Extra Repayments & Offset Guide Australia | Save Thousands
Short answer
Extra repayments reduce principal faster, cutting total interest. An offset account achieves the same effect while keeping cash accessible. The best strategy depends on your discipline, liquidity needs, and whether your loan allows unlimited additional payments.
Lump sum vs regular
A one-off $10k payment and an extra $200/month both accelerate payoff — but recurring payments are more reliable for most borrowers.
Offset mechanics
Money in an offset account reduces the balance interest is calculated on. Every dollar offsets at your loan rate — effectively a tax-free return.
Redraw vs offset
Redraw puts money into the loan and the lender controls access. Offset keeps it in your bank account with full liquidity.
Common mistakes
- Paying extra on a fixed loan that caps additional repayments — triggering unexpected break costs.
- Keeping large offset balances while paying package fees that exceed the interest benefit.
- Ignoring the tax implications of offset vs redraw on investment property loans.
- Making minimum repayments on high-rate consumer debt while over-paying a low-rate mortgage.
Mortgage extra repayments
Model how additional payments change your payoff timeline.
Offset account calculator
Calculate how much your offset balance saves in interest.
Car loan extra repayments
See the impact on a shorter-term car loan.
Personal loan extra repayments
Calculate personal loan payoff acceleration.
Check package fee value
Make sure your fee is justified by the offset benefit.
Every dollar compounds
Every extra dollar paid early works in your favour for the life of the loan.
Model the impact before committing. The difference between paying minimum and paying even slightly more can be tens of thousands in saved interest.
Open extra repayment calculatorRelated Guides
Credit Score Basics
What makes up your credit score in Australia, how to check it for free, and how to improve it before applying for a loan.
Guarantor Loans Explained
How guarantor loans work, risks for both parties, and when they make sense for first home buyers.
Fixed vs Variable Rate
When to lock, when to float, and how splitting can give you both.
Frequently Asked Questions
- How much can extra repayments save on a mortgage?
- On a $500k 30-year mortgage at 6%, an extra $200 per month can save over $100k in interest and cut more than 7 years off the term.
- Is an offset account better than extra repayments?
- Offset keeps funds accessible while reducing interest. Extra repayments may be locked via redraw. Choose offset if you need liquidity, direct repayments if you prefer forced discipline.
- Can I make extra repayments on a fixed rate loan?
- Most fixed loans cap extra repayments at $10k to $20k per year. Exceeding the cap can trigger break costs. Always check your contract.