A home loan is likely to be the biggest expense you will ever
have. While the home itself will cost several hundred thousand
dollars at least, the interest component of that loan could
easily add another couple of hundred thousand dollars. The
average home loan can last 25-30 years, which is a long time
to pay something off. The longer you have the loan for, the
more you’ll have to pay.
But what if there was a way to reduce the length of your home
loan, and save on interest? By making an extra lump sum
payment off your loan, you can.
Any extra repayment you make - be it lump sum repayments
or recurring repayments above the minimum - can save you
money simply because it reduces the principal on the loan, aka
the borrowed amount left to repay. Interest is charged on this
principle amount, so the smaller the principal, the less there is
to charge interest on.
Also the more you repay, the quicker you’ll pay off the loan.
Our home loan extra repayment & lump sum payment
calculator can show you just how much difference extra
repayments can make to your overall loan.
All you have to do with our extra repayment/lump sum
- Enter the loan amount and the loan term (the length of
- Enter your loan’s interest rate
- Enter your repayment frequency
- Enter how much your extra lump sum payment will be, or
how much extra you’ll be paying per month
- Specify how far into the loan schedule you’ll make these extra repayments
Let’s say you have a 25-year, $400,000 home loan at a 3.50%
interest rate. Using our lump sum repayment calculator, you
can estimate that a $25,000 one-off payment into your home
loan could shave 21 months and $17,500 off your home loan.
Using our extra repayment calculator, if you started paying an
extra $200 a month into that same home loan, you could save
more than 4 years and $38,000.
So if you’ve received some extra cash lately (like a work bonus
or an inheritance) or just want to get ahead of your loan, then
use our extra repayment and lump sum calculator to see how
much you could save by using that money to pay down your