If you can afford it, making extra home loan repayments is a great way to get on top of your home loan, particularly if interest rates are low.
Say your home loan is $250,000 payable over 25 years with an interest rate of 5.20% pa (with minimum monthly repayments of $1,491 to pay off the principal and interest). If you increased your regular repayments by just $100 a month, you could save $26,864 in interest and reduce the length of the loan by 2 years and 11 months.
And if you received a lump sum such as a tax return, bonus or inheritance, you could make a substantial dent in your mortgage. Let’s say you come into $20,000 after a year. If you put it towards your home loan, you could save $59,547 in interest and take 5 years and 7 months off the length of your loan.
Take a look at AMP Bank’s home loan repayments calculator, RapidPay to see how much time and money you could save by paying more off your home loan.
Of course everyone’s situation is different and you need to do what’s right for you.
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It’s important to consider your particular circumstances and read the relevant Product Disclosure Statement or Terms and Conditions before deciding what’s right for you. This information hasn’t taken your circumstances into account.
This information is provided by AMP Life Limited. Read our Financial Services Guide for information about our services, including the fees and other benefits that AMP companies and their representatives may receive in relation to products and services provided to you. All information on this website is subject to change without notice.