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Extra repayment calculator

See how extra repayments reduce your interest and shorten your loan term.

Calculator mortgage

Logic updated January 2026

This calculator shows what happens to your loan term and total interest when you pay more than the minimum scheduled repayment each period. Even a modest extra amount, applied consistently, can shave years off the loan and tens of thousands off the total interest because every extra dollar reduces the principal that future interest is calculated on.

How this is calculated

Formula 

newBalance = (oldBalance × (1 + r)) − (basePayment + extraAmount)

Step-by-step

  1. Calculate the base periodic payment from the standard amortisation formula on the original principal, rate, and term
  2. For each period, accrue interest on the current balance at the periodic rate
  3. Subtract the combined base payment plus extra amount from the balance after interest is added
  4. Repeat until the balance reaches zero — count the periods and sum the interest along the way
  5. Compare the new total periods and total interest against the original schedule to derive periods saved and interest saved
Rounding mode
ROUND_HALF_UP
Precision
20-digit internal precision (Decimal.js), rounded to 2 decimal places for display
Logic last reviewed

Assumptions & limitations

What this calculator assumes

  • Extra repayment is applied each period on top of the minimum payment
  • Fixed interest rate for the entire loan term
  • Final period payment is capped at the remaining balance — no overpayment
  • No offset account or redraw facility is modelled
  • No fees or penalties (e.g., break costs on fixed loans) are included

What this calculator doesn’t account for

  • Does not model variable rate movements during the loan
  • Does not include break fees that may apply to fixed-rate loans
  • Does not compare extra repayments against alternative uses of the same money (investing, offset)
  • Does not account for tax effects when the loan is for an income-producing asset
  • Does not factor in lump-sum payments — only consistent periodic extras

Worked example

A borrower with a $400,000 loan at 6% over 30 years, paid monthly, decides to add $200 to every monthly repayment from day one.

Input Value
Loan amount $400,000
Interest rate 6%
Loan term 30 years
Extra repayment $200/month

Loan paid off ~4.5 years early — ~$71,000 of interest saved

The base monthly repayment is about $2,398. Adding $200 reduces the balance faster every month, which shrinks the interest charged in subsequent months. The compounding effect of those earlier principal reductions is what cuts roughly 54 months off the term and saves the majority of the interest.

Frequently asked questions

How do extra repayments reduce interest?

Interest is calculated on the outstanding balance every period. Every dollar of extra repayment immediately lowers that balance, so the next period's interest is a tiny bit smaller — and so is every period after that. The savings compound, which is why early extra repayments save more than the same amount paid late in the loan.

Should I put extra into offset or direct repayment?

Mathematically the interest saving is similar — both reduce the balance the bank charges interest on. The practical difference is access: offset money stays accessible for emergencies, while direct repayments reduce the balance permanently and may be harder or impossible to redraw depending on your loan. This calculator models direct repayment.

Can I make extra repayments on a fixed-rate loan?

Many fixed loans cap or prohibit extra repayments during the fixed period and may charge break costs. Variable and split loans usually allow unlimited extras. Check your loan's fine print before relying on these projections — this calculator assumes extra repayments are accepted without penalty.

How much can one extra payment per month save?

It depends on your principal, rate, and term, but a useful rule of thumb is that on a 30-year loan, one extra full repayment per year (the equivalent of paying fortnightly instead of monthly) typically cuts 4–6 years off the loan. Doubling that effect by adding a smaller extra to every payment can save 20–25% of the total interest.

What happens if I stop the extra payments later?

The savings you've already made are locked in — you've reduced the balance, so future interest is calculated on the smaller number. Stopping the extras returns the loan to its original amortisation path on the new balance, so you'll still finish earlier than the original schedule, just not as early as if you'd kept going.

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