How to Calculate Your Mortgage Savings From Extra Repayments

A step-by-step guide with real examples — find your exact interest saving and new payoff date in a few minutes.

If you are thinking about paying extra on your mortgage, the first question is always: how much will I actually save? The answer depends on four things — your loan balance, interest rate, remaining term, and how much extra you plan to pay. This guide walks you through the calculation step by step and shows you how to use the Mortgage Paydown Calculator to get a precise answer for your own loan.

What You Need Before You Start

To calculate your saving accurately, you need four pieces of information from your loan statement or lender app:

• Original loan amount — the amount you borrowed at settlement, not your current remaining balance.
• Loan term — the original length of your loan in years (e.g. 25 or 30 years).
• Current interest rate — your annual rate as a percentage (e.g. 6.14%).
• Loan start date — the date your first repayment was due, usually the first of the month after settlement.

All four are on your most recent loan statement, or in your lender's app under “loan details”. Once you have them, the calculation takes less than a minute.

A Worked Example

Say you have a $600,000 loan at 6.00%, 30-year term, and you are considering paying an extra $500 per month. Here is what the numbers look like:

That saving — $212,713 — comes from the same $500/month applied every month from the start of the loan. The reason it is so large is that every extra dollar you pay reduces the principal, which reduces the interest charged the next month, which means more of your regular repayment goes to principal the month after — and so on for the remaining life of the loan.

How to Calculate Your Own Saving — Step by Step

Step 1 — Enter your loan details

Open the calculator and fill in the four fields in Section 1 — Loan Details:

• Initial Loan Amount — use your original borrowed amount, not your current balance
• Loan Term — your original term in years
• Initial Interest Rate — your current annual rate as a percentage
• Loan Start Date — the date of your first repayment

Step 2 — Add your extra repayment

Tick the checkbox for Section 2 — Recurring Extra Payments and enter:

• Amount — the extra dollar amount per period (on top of your minimum repayment)
• Frequency — monthly, quarterly, or annually
• Start date — when you plan to begin the extra repayments (can be today or a future date)

If you are modelling a one-off lump sum instead — such as a tax refund — use Section 3 — Ad-Hoc Extra Repayments and add a row with the date and amount.

Step 3 — Calculate and read your results

Click Calculate My Paydown Plan. The results page shows:

• Total interest saved — the dollar difference between your baseline and your plan.
• Time saved — how many months earlier your loan is paid off.
• Balance chart — a visual comparison of your loan balance over time with and without extra repayments.
• Month-by-month schedule — the full amortisation table showing exactly how each payment is split between principal and interest.

Where to Find Each Value

Initial Loan Amount

This is the original amount you borrowed, not your current remaining balance. If your loan was for $600,000, enter 600000 even if you have already paid some of it down.

Where to find it:Your loan contract, or your lender's app under “loan details” or “original loan amount”.

Loan Term (Years)

The total length of your loan in years as agreed when you took it out. Most Australian home loans are 25 or 30 years.

Where to find it:Your loan contract or your lender's app. It's usually labelled “loan term”.

Initial Interest Rate (%)

Your current annual interest rate as a percentage. Enter 6.29 for 6.29% p.a. — do not convert to a decimal.

Where to find it:Your most recent loan statement, lender app, or mortgage documents. Look for “interest rate”, “variable rate”, or “fixed rate”.

Loan Start Date

The date your first repayment was due — usually the first of the month after settlement.

Where to find it: Your loan contract, settlement statement, or first loan statement.

Modelling Future Rate Changes

If you expect your interest rate to change — for example, when a fixed-rate period ends or if you are anticipating RBA rate cuts — use Section 4 — Ad-Hoc Rate Changes to add the new rate and the date it takes effect. The calculator recalculates your minimum repayment at the new rate and shows the updated payoff timeline.

You can add as many rate changes as you like, in chronological order. This is useful for stress-testing your extra repayment plan against scenarios where rates rise or fall over the coming years.

What Changes Your Saving the Most?

• When you start. Starting extra repayments today versus in two years can reduce your total saving by 15–25%. The earlier you start, the longer each extra dollar has to compound.
• How much you pay. The relationship is not linear — doubling your extra repayment more than doubles the interest saved, because the faster principal reduction accelerates the compounding effect.
• Your interest rate. A higher rate means each dollar of extra principal saves more interest per month. Extra repayments are more powerful on expensive loans.
• Loan size. A larger loan benefits more in dollar terms, though the time saved per dollar is slightly lower because $200 is a smaller proportion of a larger minimum repayment.