Extra repayments are something we can control. We can’t control what the RBA decides to do or what that does to the household budget. The cash rate has been sitting at 4.35% since May 2026 after three increases in the first half of the year, so for now we’re in a holding pattern, and that still lands on the roughly one third of households who are paying off a mortgage. Your rate might be high, but you can claw some of it back by cutting the loan term at the back end.

One of the main things we preach to clients is that you should be structuring your home loan so you’re not paying it off for 30 years. The worst thing you can do is pay monthly and pay the minimum. Most borrowers stick to the minimum the lender sets, and the lender is perfectly happy with that. Paying a bit more than the minimum is the simplest way to cut what the loan costs you overall.

Want to know what an extra $100 or $200 a month does to your loan? Email us at startnow@sorenfinancial.com and we’ll run your actual numbers.

How do extra repayments work?

When you take out a mortgage, it has two parts: the principal (the amount the bank lends you) and the interest (the cost of borrowing that money).

In the early years, most of each scheduled repayment goes to interest. Any extra you pay, though, comes straight off the principal.

A smaller principal means less interest charged next month, and the month after that. Do it early in the loan and the effect compounds in your favour for decades. That’s what shortens the loan term by years rather than months.

Lump sums work the same way. An inheritance, a cash gift or a decent tax return dropped onto the loan cuts the balance the interest is calculated on from that day forward.

How much can I save by making extra repayments?

Let’s assume you have a $700,000 loan over 25 years at 6.19% p.a. (that’s the RBA’s average outstanding owner-occupier principal-and-interest rate for July 2026, Table F6, as at September 2026). Your monthly repayment is $4,592, and over the life of the loan you’d pay $677,528 in interest.

Add just $150 a month and you save about $56,513 in interest and finish one year and nine months early.

The table below shows the same $700,000 loan with different extra amounts. Run your own loan through our extra repayments calculator to get your figures.

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Projected savings on a $700,000 loan over 25 years at 6.19%

Extra Monthly Repayment	Interest Saved Over Life of Loan	Time Saved
$50	$20,079	7 months
$100	$38,875	1 year 2 months
$150	$56,513	1 year 9 months
$200	$73,106	2 years 3 months
$250	$88,750	2 years 9 months
$300	$103,528	3 years 3 months

Starting early is ideal, but not everyone can. You still get a real result if you start later in the loan, it’s just smaller because there’s less interest left to save.

Same loan, but you only start the extra $150 a month ten years in: you still save about $16,410 in interest and knock nine months off the term.

Are there any limits?

Most variable rate loans allow unlimited extra repayments at no cost. Fixed-rate loans are different: most cap what you can pay extra each year and charge break costs if you go over, and the cap varies a lot between lenders. Check your lender’s policy on extra repayments before you sign up, and especially before you fix.

Is it worth making extra repayments on my home loan?

Paying more than the minimum is the cheapest guaranteed return most households will ever get. At 6.19% every dollar you put on the loan earns you 6.19% after tax, with no risk, because it’s interest you no longer pay.

That said, look at the rest of your position first. If you have a credit card or personal loan charging two or three times your home loan rate, clear that before putting extra on the mortgage. And keep a buffer. Extra repayments in a redraw or offset are still accessible, but if your loan doesn’t have either, money you’ve paid in is hard to get back out.

Contact us on startnow@sorenfinancial.com and we’ll run an audit on your existing home loan and show you how to shave years off it, and what that adds to your family’s wealth and your retirement.