Updated July 2026. Most Australians sign a 30-year mortgage and quietly assume they're stuck with it. The difference between drifting to the finish line and deliberately sprinting to it is measured in hundreds of thousands of dollars of interest. This guide answers the question precisely: how many extra dollars per month does it take to knock 5, 10 or 15 years off a typical Australian home loan, and what do you get back for each of them?
All figures below use standard amortisation maths at a 6.25% p.a. variable rate with monthly repayments, and are marked approximate (~) because your lender's daily interest calculation, fees and rate changes will shift them slightly. Run your own numbers in our Home Loan Repayment Calculator.
The Exact Numbers — $600,000 Loan at 6.25%
Start with the most common scenario on this site: a $600,000 loan over 30 years at 6.25%. The standard repayment is ~$3,694 a month. Here is the extra you need to add to finish in 25, 20 or 15 years instead — and the interest you keep.
| Payoff Target | Total Repayment | Extra per Month | Years Cut | Interest Saved |
|---|---|---|---|---|
| 30 years (baseline) | ~$3,694 | — | — | — |
| 25 years | ~$3,958 | ~$264 | 5 | ~$142,500 |
| 20 years | ~$4,386 | ~$691 | 10 | ~$277,400 |
| 15 years | ~$5,145 | ~$1,450 | 15 | ~$403,900 |
Look at the shape of those numbers. The first ~$264 a month — roughly a few subscriptions and a weekly takeaway — buys back five entire years and ~$142,500. Cutting ten years takes ~$691 a month: serious, but achievable for many dual-income households. The maths is non-linear — each extra year shaved costs a little more than the last, because you're compressing the same debt into fewer repayments.
Smaller and Larger Loans: $400k and $800k
The extra required scales almost exactly with loan size, so you can interpolate for your own balance.
| Loan | Baseline (30yr) | Finish in 25yr | Finish in 20yr | Finish in 15yr |
|---|---|---|---|---|
| $400,000 | ~$2,463/mo | +~$176 (saves ~$95,000) | +~$461 (saves ~$185,000) | +~$967 (saves ~$269,000) |
| $800,000 | ~$4,926/mo | +~$352 (saves ~$190,000) | +~$922 (saves ~$370,000) | +~$1,934 (saves ~$538,600) |
A useful rule of thumb at rates around 6.25%: cutting 10 years off a 30-year loan takes extra repayments of roughly 1.15% of the loan amount per year — about $115 a month per $100,000 borrowed — and returns interest savings of around 46% of the original loan amount.
Why Early Extra Dollars Matter Most
Mortgage interest is front-loaded. In month one of a $600,000 loan at 6.25%, ~$3,125 of your ~$3,694 repayment is pure interest; only ~$569 touches the principal. Twenty-five years in, the split has flipped. That is why an extra dollar paid in year one keeps compounding in your favour for the entire remaining term, while the same dollar paid in year twenty-five saves you a few cents.
Concretely: a single extra $10,000 paid in year 1 of that loan saves roughly $35,000 in interest over the life of the loan. The same $10,000 paid in year 20 saves only around $8,000. Same sacrifice, completely different payoff. If you take one thing from this article, take this: do not wait until you feel rich enough to start. A small extra amount now beats a large extra amount later.
Lump Sums vs Monthly Extras
Both work; timing decides which wins. A lump sum lands on the balance immediately, so $12,000 today beats $500 a month for the next two years even though the totals match — the balance reduction arrives sooner. In practice, combine the two: an automated standing extra on every repayment, plus lump sums whenever a tax refund or bonus arrives. The average Australian tax refund is around $3,000; directed at a $600,000 loan every July, that alone trims roughly two years and $60,000-plus in interest.
The Offset Account: Same Maths, More Flexibility
A dollar in a 100% offset account reduces your interest charge exactly as if you had paid it off the principal — the bank simply calculates daily interest on (balance minus offset). So "keep $50,000 in offset for the life of the loan" and "pay $50,000 off the loan" produce essentially identical interest savings, with one big difference: offset money remains yours to spend instantly, no redraw request needed. That flexibility is ideal for your emergency fund and for investors who may later convert the home to a rental (offset preserves the deductible loan balance; extra repayments don't, and redrawing them for private purposes can taint deductibility). The catch is behavioural — visible, spendable money gets spent. If you know you'll dip into it, direct extra repayments are the stronger commitment device. We compare the two in detail in offset account vs mortgage overpayment.
Fixed Rate Loans: Mind the Cap
Variable loans in Australia almost always allow unlimited extra repayments. Fixed loans don't. Most lenders cap extras during the fixed term — commonly $10,000 per year, or 5-10% of the fixed balance, depending on the bank — and exceeding the cap can trigger break costs that wipe out years of savings. If you're part-fixed, part-variable, aim all extras at the variable split. If you're fully fixed and have surplus beyond the cap, park it in an offset (if your fixed product has one) or a high-interest savings account until the fixed term expires, then pay it in as a lump sum.
When You Should NOT Overpay the Mortgage
Extra mortgage repayments earn you a guaranteed, tax-free return equal to your rate — 6.25% here. That's excellent, but it isn't always the best use of the next dollar:
- Higher-interest debt first. A credit card at 20% or a personal loan at 12% costs you far more per dollar than the mortgage saves. Kill those first, always.
- No emergency fund. Before locking money into the house, hold 3-6 months of expenses somewhere accessible (an offset is perfect — you get the mortgage-rate return and the liquidity).
- Salary sacrifice into super at 30%+ marginal rates. A pre-tax dollar sacrificed into super is taxed at 15% instead of your marginal rate. For someone on the 37% bracket, $1,000 of pre-tax salary becomes $850 inside super, versus only $630 in the hand to put on the mortgage. Even at modest super returns that head start is hard for a 6.25% mortgage saving to beat over long horizons — the trade-off is that super is locked until preservation age. Many advisers suggest a split; get personal advice for your situation.
- Imminent big expenses. If a renovation, car or baby is 12 months away, keep the cash liquid rather than paying it in and redrawing at the bank's discretion.
The Inflation Angle
One honest counterpoint to aggressive overpayment: inflation quietly shrinks your mortgage for you. A $3,694 repayment that feels heavy today declines by roughly a quarter in real terms each decade if wages grow at 3% a year — an argument for not over-sacrificing your quality of life. But inflation doesn't reduce the interest you're charged along the way, and at 6%+ rates the interest bill dwarfs the inflation benefit early on. The balanced take: overpay hard in the expensive early years, and relax as inflation and a shrinking balance do more of the work later.
Practical Ways to Find the Extra Money
- Fortnightly repayments — pay half the monthly amount every fortnight and you make 26 half-payments (13 months' worth) a year without noticing.
- Round up — a ~$3,694 repayment rounded to $4,000 is ~$306 extra a month, enough to cut over five years off.
- Bank every rate cut — when the RBA cuts and your lender passes it on, leave your repayment where it was.
- Refinance, then don't spend the saving — moving from 6.25% to 5.85% on $600,000 frees ~$155 a month; keep paying the old amount and it's a free extra repayment. More tactics in our guide to paying off your mortgage faster.
Frequently Asked Questions
How much extra do I need to pay off a $600,000 mortgage 10 years early?
About ~$691 extra per month on top of the standard ~$3,694 repayment (at 6.25% over 30 years) clears the loan in ~20 years and saves ~$277,000 in interest.
Is a lump sum better than the same amount as monthly extras?
Yes, marginally — a lump sum paid today reduces the balance immediately, so it saves more interest than the same total drip-fed over the following years. Combine both where possible.
Does money in an offset account count the same as extra repayments?
Mathematically, yes: every offset dollar cancels interest on a loan dollar. The difference is access (offset money stays spendable) and tax treatment if the property later becomes an investment.
Can I make unlimited extra repayments on a fixed rate loan?
Usually not. Most Australian fixed loans cap extras at around $10,000 a year or 5-10% of the balance; going over can incur break costs. Variable loans are generally unlimited.
Should I overpay the mortgage or salary sacrifice into super?
At marginal tax rates of 30%+, salary sacrifice often wins mathematically because contributions are taxed at just 15% — but super is locked away for decades. Many people split their surplus between the two. This is exactly the decision to take to a licensed adviser.
Run Your Own Numbers
Test any loan size, rate and extra repayment and see the years and interest saved instantly.
Open the Home Loan Repayment Calculator →Disclaimer: This article is general information only and does not consider your objectives, financial situation or needs. Figures are approximate, based on standard amortisation at an assumed 6.25% p.a. rate, and will differ from your lender's exact calculations. It is not financial, tax or credit advice — consider seeking advice from a licensed financial adviser before acting.