Can you make extra home loan repayments?

Can you make extra home loan repayments?

Adopting a strategy of making extra home loan repayments can potentially save thousands of dollars in interest and trim years off the life of a mortgage. However, before adopting this strategy it is wise to plan extra repayments and to ensure that the loan you have is the  best type of loan for such a strategy.

It is true that extra repayments make a difference to the life of the loan and making regular extra repayments could conceivably halve the loan term (depending upon the amount) so it is certainly a worthwhile financial habit to get into and the great news is that most variable or standard variable rate home loans will allow you the flexibility to make extra repayments.

While this may not seem much of a priority in the initial stages of the loan, most borrowers will find that their income and their capacity to repay will significantly increase over the course of the loan term. This flexibility can become an empowering and liberating factor as the loan matures, so the capacity to make extra repayments should be considered when determining your choice of loan type.

Generally fixed rate loans don’t offer the same degree of flexibility, although most fixed loans will have some restrictions surrounding extra repayments – like an inability to redraw or a maximum annual extra payment amount.

It is therefore to carefully consider your extra repayment plans prior to entering into a loan agreement. This is where a broker can really help you to get your head around the complexities of various loan offers and help you to identify the loan that will suit your personal circumstances best.

Everyone’s personal circumstances will be different and while extra repayments may make good sense for some, there may be others who have additional borrowings incurring higher levels of interest. Naturally these loans should attract any extra repayments first.


All of these competing factors need to be weighed against your personal priorities before selecting the loan type that best suits you and your desire to make extra repayments.

In order to make the best decision, talk  to one of the team at Australian Finance Hub to find the right loan that matches both  your current circumstances as well as your future plans.