1300 312 712
Have Any Questions?
L2, 11-15 Deane St
Burwood NSW 2134
Visit Us (By Appointment)
1. What are extra home loan repayments?
Extra repayments refer to any voluntary payments beyond scheduled monthly instalments. These extra payments reduce the principal amount of the loan.
You can make extra repayments by:
- Lump sum payments: Make a single large payment from a bonus or a tax refund.
- Regular extra payments: Add a small amount to your regular monthly instalments.
- Weekly or fortnightly payments: Divide the monthly payment into smaller, more frequent repayments.
2. How do extra home loan repayments help me save money?
Extra repayments can help you save money by reducing the principal amount of your loan.
- Reduced principal: Your payments go directly towards reducing the principal amount of your loan. Eventually, you will owe less money to the lender.
- Lower interest charges: Interest is calculated on the outstanding balance of your loan. A lower principal balance means you will be charged less every month.
- Shorter loan term: As you pay your principal loan amount faster, you can shorten the overall loan term. You will be debt-free sooner.
3. Can I make extra repayments on any type of home loan?
You can make extra repayments on variable rate home loans as fixed rate loans have restrictions or limitations such as:
- Limits on the amount of extra repayments you can make.
- Charges for paying off the loan before the fixed rate period ends.
Please check the terms and conditions of your loan agreement or contact your lender to learn more about their policies regarding extra repayments.
4. Are there any fees or penalties for making extra repayments?
It depends on the type of loan.
Fixed Rate Loans
Fixed rate loans may incur break costs or early repayment fees if extra repayments exceed the limits set by the lender, or if the loan is fully paid off before the end of the fixed term. These are common fees but may become significant if you make extra repayments that exceed the allowable limits. You may also be charged early repayment fees if you pay off the loan completely before the fixed rate period ends.
Variable Rate Loans
There are generally no fees if you make extra repayments on variable rate loans. Check specific terms and conditions of your loan agreement for extra repayment restrictions or fees.
5. Do extra repayments reduce my monthly minimum repayment amount?
No. Making extra repayments generally does not automatically reduce your minimum monthly repayment amount. However, some lenders may allow recalculations of your repayments following substantial extra repayments, potentially lowering future minimum repayments.
Our experienced mortgage brokers will advise you accordingly whether this is possible in your specific case.
6. What’s the difference between extra repayments and an offset account?
Here’s the difference between extra repayments and offset accounts:
Extra Repayments
These payments reduce the loan principal; thus, making regular extra repayments can reduce your loan amount.
Offset Account
An offset account reduces the interest charged as the money in your account is offset against your principal loan balance when interest is calculated. You pay less interest, reducing the amount you owe over time. You may still use the money in your offset account to pay bills or make withdrawals or transfer money to another account.
Which one is better?
If your goal is specifically to shorten the loan term and you have funds you don’t need immediate access to, making extra repayments can be highly effective. However, if you prefer ongoing flexibility and immediate access to funds, an offset account may better suit your financial objectives.
If you prefer flexibility and minimise interest payments while still being able to access money in your account, an offset account may be the best option for you.
Your success
is
our success
We understand everyone’s circumstances are different and we take the time to understand you and your goals. We value forming lifelong relationships with all our clients and we are fully committed to adding value every step of the way.
We know that mortgages can sometimes be complex and hard to understand. We focus on simplifying the process for you and we treat your loan as if it were our very own. Let us do what we do best so there’s one less thing for you to worry about.
Join thousands of satisfied customers
