Updated July 2026
On a $600,000 loan at 6.25% over 30 years, you'll pay about $730,000 in interest — more than the amount you borrowed. Cut that to a 25-year term and the interest bill drops to roughly $587,000. Every strategy in this guide is really just a different way of shortening that timeline, and each one comes with a worked dollar figure so you can see what it's actually worth.
The backdrop matters. The RBA held the cash rate at 4.35% on 16 June 2026, with the next decision due 11 August 2026. CPI ran at 4.0% for the year to May 2026, which means the easy-cuts scenario many borrowers were banking on hasn't arrived. Typical variable owner-occupier rates still sit above 6%. At those rates, every extra dollar you throw at the loan earns a guaranteed 6%+ return, tax-free — better than most term deposits after tax, with zero risk.
All the examples below use a $600,000 loan at 6.25% (principal and interest, owner-occupier). Here's the baseline:
| Loan term | Monthly repayment | Total interest paid |
|---|---|---|
| 30 years | ~$3,694 | ~$730,000 |
| 25 years | ~$3,958 | ~$587,000 |
Read that again: paying $264 a month more — about $61 a week — saves roughly $143,000 and five years. That asymmetry is why early repayment strategies work so well. In the first years of a loan, most of each repayment is interest; anything extra goes straight to principal and stops compounding against you for decades.
This is the most misunderstood strategy in Australian personal finance, so let's be precise about the mechanics.
There are 26 fortnights in a year but only 12 months. If you pay half your monthly repayment every fortnight, you make 26 half-payments — the equivalent of 13 monthly payments a year instead of 12. You've snuck in a full extra month's repayment annually without ever feeling it.
The catch: some lenders, when you ask to "switch to fortnightly", recalculate a true fortnightly minimum (roughly your annual repayments divided by 26). That version pays the loan off on almost exactly the same schedule. The saving comes entirely from the extra 13th payment, not from paying more often.
Rather than vague "round up your repayments" advice, here's what specific extra amounts do to the same $600,000, 6.25%, 25-year loan:
| Extra per month | New payoff time | Interest saved | Years saved |
|---|---|---|---|
| $100 | ~23.6 years | ~$39,000 | ~1.4 |
| $250 | ~21.8 years | ~$91,000 | ~3.2 |
| $500 | ~19.4 years | ~$154,000 | ~5.6 |
| $1,000 | ~16 years | ~$240,000 | ~9 |
Notice the returns aren't linear — the first $100 saves $39,000, but $1,000 saves $240,000, not $390,000. Early dollars do the heaviest lifting because they kill principal that would otherwise accrue interest for two-plus decades. Lump sums behave the same way: a one-off $25,000 paid in year one (keeping repayments unchanged) saves around $89,000 and about 2 years on this loan. If you're aiming at a specific target, our guide on how much extra it takes to finish 10 years early works through the reverse calculation, and the Home Loan Repayment Calculator will run your exact numbers.
Fixed-rate warning: these tables assume a variable loan. Most Australian lenders cap extra repayments on fixed loans — commonly $10,000–$30,000 per year, or 5–10% of the balance, depending on the lender. Blow through the cap and you can trigger break costs, which are calculated on the lender's funding-cost loss and can run to thousands. If you're on a split loan, direct all extra repayments to the variable portion.
Both reduce the balance your daily interest is calculated on, dollar-for-dollar, so $30,000 in either saves identical interest. The differences are legal and practical:
As a repayment strategy, the effect is real: keeping an average of $50,000 offset against our example loan saves roughly $157,000 in interest and around 3 years, because your unchanged repayments bite deeper into principal every month. The full comparison — including who should pick which — is in our offset vs overpayment guide.
Loyalty costs money. Lenders' back books routinely sit 0.3–0.6% above the rates offered to new customers, and on a big balance that's serious: a drop from 6.25% to 5.75% on $600,000 saves about $183 a month. Keep paying the old amount after refinancing and the loan finishes about 2.3 years early with roughly $118,000 less interest.
A quick decision checklist before you switch:
The cheapest "refinance" is often a phone call: ask your current lender's retention team to match the rate they're advertising to new customers. It works surprisingly often and costs nothing.
Tax refunds, bonuses, and — whenever the RBA does start cutting — rate cuts themselves. When your rate falls, your minimum repayment falls, but nothing forces you to reduce what you actually pay. Keeping repayments at the old level after a cut is the single most painless acceleration there is, because your budget doesn't change at all. With the next RBA decision due 11 August 2026, it's worth deciding now that any future cut gets banked rather than spent.
Usually yes, up to a cap — commonly $10,000–$30,000 a year or 5–10% of the balance, depending on the lender. Exceeding it can trigger break costs. Variable loans generally allow unlimited extra repayments.
On $600,000 at 6.25% with 25 years to run: roughly $154,000 in interest and about 5.6 years off the term.
Only the "half your monthly repayment every fortnight" version, which produces 13 monthly-equivalent payments a year. A recalculated true fortnightly minimum saves almost nothing — confirm which one your lender has set up.
The interest saving is identical. Choose offset for instant access, legal ownership of the funds, and future investment-property tax flexibility; choose redraw if you want to avoid a ~$300–$400 annual package fee and won't need quick access.
Extra repayments earn a guaranteed, tax-free return equal to your rate — 6%+ in 2026. An investment must beat that after tax just to draw level, without the certainty. Salary-sacrificed super is the main alternative worth modelling because of its 15% contributions tax; many people split between the two.
On $600,000, 0.25% is about $1,500 a year. Against typical switching costs of $700–$1,200, you break even inside a year — faster with a cashback. Below ~$300,000 owing, the case gets thinner; do the maths on your balance.
This article is general information only and doesn't consider your personal objectives, financial situation or needs — consider seeking advice from a licensed professional before acting.