Share this article

blog
Your free personal budget template
MyBudget will show you how to make budgeting your friend.

How extra repayments can save you thousands and help you own your home sooner

Did you know that even small extra repayments on your mortgage can lead to significant savings and help you pay off your home years earlier? By reducing the loan balance faster, you not only save on interest but also free yourself from debt sooner, giving you more financial freedom.

MyBudget’s Home Loan Repayment Calculator makes it easy to see how extra repayments can transform your financial future.

Unlock hidden savings!
Our team or Money Coaches can help

How extra repayments work

When you make extra repayments, the additional amount goes directly toward reducing the principal balance of your loan. This lowers the interest charged over time because interest is calculated on the remaining loan balance.

Small extra repayments, big savings

Let’s take an example of a $400,000 loan with a 6.19% interest rate over 30 years:

  • Regular monthly repayment: $2,448
  • Add an extra $100 per month
    • Interest saved: $58,770
    • Loan term reduced by 3 years

With consistent extra repayments, you could save tens of thousands of dollars and own your home outright much earlier than planned.

Just over 5 years ago, we were hovering on going bankrupt. Since MyBudget has been in our life, we have cleared past debts and have now built a new home and MyBudget are now guiding us through the next chapter in our financial life.

MyBudget client, 14 April 2024

How to find extra money for repayments

If the idea of finding extra money feels daunting, MyBudget can help you adjust your finances and free up cash:

  1. Create a personalised budget: Our money experts work with you to identify areas where you can save.
  2. Automate your savings: Set up automatic transfers for extra repayments to ensure consistency.
  3. Prioritise spending: Focus on needs over wants, like dining out or entertainment, to channel funds toward your mortgage.
  4. Use windfalls wisely: Allocate tax refunds, bonuses, or unexpected income toward extra repayments.

Other benefits of extra repayments

  1. Build equity faster: By reducing your principal faster, you increase the equity in your home, which can be beneficial if you want to refinance or sell.
  2. Reduce financial stress: The faster your loan balance decreases, the less debt you carry, leading to greater financial peace of mind.
  3. Flexibility in future payments: Many lenders allow you to redraw extra repayments in times of need, providing a financial safety net.

What’s your goal? Pay off sooner or save more?

Making extra repayments isn’t just about numbers—it’s about aligning with your financial goals:

  • Want to retire debt-free? Extra repayments help you achieve this faster.
  • Planning for future investments? Save money on interest and use those funds elsewhere.
  • Looking for financial freedom? The sooner you’re mortgage-free, the more flexibility you have.

How MyBudget can help you maximise savings

At MyBudget, we specialise in helping clients achieve their financial goals, including paying off their mortgage faster:

  1. Budget customisation: Tailor your budget to accommodate regular extra repayments.
  2. Automation: Ensure your extra payments are consistent with automated transfers.
  3. Expert guidance: Our money experts provide strategies to save more and reduce debt.
  4. Financial tools: Use our home loan repayment calculator to explore how much faster you can own your home.

If you’re ready to go beyond calculations, let MyBudget help you create a personalised budget plan to make those savings a reality. Enquire online or call 1300 300 922 to book your free budget consultation today.

Discover the power of budgeting
Start with a FREE no obligation appointment
This article has been prepared for information purposes only, and does not constitute personal financial advice. The information has been prepared without taking into account your personal objectives, financial situation or needs. Before acting on any information in this article you should consider the appropriateness of the information having regard to your objectives, financial situation and needs.