Home loan repayments in Australia (2026)
Your repayment is set by three things: the loan amount, the interest rate, and the term. As of mid-2026, owner-occupier variable rates run about 5.74%โ5.99% p.a. from the big four (P&I, under 80% LVR), with the market average variable closer to 6.84% (figures from mid-2026, when the RBA cash rate was 4.35%; it rose to 4.60% on 30 September 2026). Repayments are amortised: early on most of each payment is interest, and only later does the balance fall quickly โ which is exactly why extra repayments made early are so powerful. Use the calculator above to see your repayment, total interest, and the effect of paying extra.
P&I vs interest-only
Principal & interest (P&I) pays the loan down and costs less over its life. Interest-only (IO) keeps repayments low temporarily but you owe the same at the end and pay more in total โ common for investors, rarely ideal for owner-occupiers. Lenders also price IO higher and assess it more strictly.
The real lever: extra repayments and offset
Because interest is charged on the balance daily, every extra dollar paid early saves compounding interest for the rest of the loan. Even modest extra repayments cut years off the term and tens of thousands in interest. An offset account achieves the same effect with flexibility: money sitting in it is netted off your loan balance for interest, so $20,000 in offset on a 6% loan saves about $1,200 a year in interest while staying accessible. The calculator above shows the term and interest saved for any extra-repayment amount.
Worked example: $600,000 at 6% over 30 years
A $600,000 loan at 6% p.a. over 30 years costs about $3,597/month, with roughly $695,000 in total interest over the full term. Add just $300/month extra and you'd repay it around 5 years sooner and save on the order of $130,000 in interest. Switch to fortnightly payments (see below) and you trim it further โ same budget, smarter timing.
The fortnightly trick
Pay half your monthly repayment every fortnight and you make 26 half-payments a year โ equal to 13 monthly payments, not 12. That one extra month per year, applied straight to principal, can shave years off a 30-year loan without you really noticing it.
Is it worth refinancing in 2026?
If your current rate is materially above the ~5.74%โ5.99% big-four range, refinancing can cut your repayment immediately. On a $600,000 loan, dropping from 6.84% to 5.84% saves roughly $380/month โ about $4,500 a year. Weigh that against switching costs (discharge, application, any break fees on fixed loans) โ a broker can run the numbers and tell you the break-even quickly. A new lender will also reassess you at a test rate above the rate you would actually pay, so check that you still qualify: how APRA's serviceability buffer works. Loyalty rarely pays on a mortgage; lenders reserve their sharpest rates for new business.