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What happens if I make extra home loan repayments?

3 min read

Home loans

What happens if I make extra home loan repayments?

3 min read

Putting a little extra money onto your mortgage — whether it’s a one-off lump sum, like an inheritance, or as a regular deposit — can be a great way to pay it off quicker. Here’s what you need to know about making and calculating your extra repayments.

How do home loan extra repayments work?

It’s simple. You voluntarily make extra repayments on top of your minimum home loan repayments. By putting more than you need to into your loan, you’ll reduce the principal loan amount owing. And, if you make extra repayments in the early years of your loan, it can help shave down your loan interest over the long term, since you’re lowering the total principal amount on which the interest is calculated.

If you’ve got a Fixed Rate Home Loan with Suncorp Bank, you can make extra repayments of up to $500 a month more than your regular minimum monthly repayment. After that, an Early Payment Interest Adjustment Fee (EPIA) may apply. For more information, take a look at the EPIA brochure (PDF).

However, you can make as many extra repayments as you like, for as much as you like, with a Suncorp Bank Standard Variable or Back to Basics Home Loan

Explore Suncorp Bank Standard Variable Home Loans

How much can you save with extra repayments?

While putting small amounts into your loan every couple of weeks may not seem like it would add up to much, it’s the saving in interest that can really help.

Say you’ve got a Suncorp Bank Back to Basics Standard Variable Loan owing $500,000 over 30 years, with an interest rate of 2.78% p.a.

On top of your monthly payments, you decide to throw in $100 per fortnight. Doesn’t sound like much, right? But, by doing this you could pay your loan up to 3 years and 11 months quicker, and save a total of $34,349 in interest!

When should you make extra repayments?

When you have extra savings — say, after you receive a big tax refund — it can be tempting to put it towards a holiday, a car or upgrades around the house. But, putting at least some of it into your mortgage can help you get one step closer to owning your home outright.

Alternatively, you could make extra home loan repayments on a fortnightly or monthly basis. As interest is calculated on your loan daily, making an extra repayment in more frequent smaller amounts rather than in a single lump sum can save you more on your interest. Even an extra $20 a fortnight can go a long way!

If you need some help figuring out how much in extra repayments you can afford and how long it will take to pay off your mortgage, our home loan repayment calculator is a great place to start.

Drawing on extra repayments with a redraw facility

Making extra repayments can also come in handy if you can access a redraw facility. A redraw facility, or Home Loan Cashback* as we call it at Suncorp Bank, lets you make a request to draw on some of the extra repayments you’ve made into your home loan.

The amount you redraw will then be added back onto the principal amount owing on your mortgage, which you’ll have to pay back over the course of your loan. So if disaster were to strike, those extra repayments you made could make a huge difference.

Looking for more information about home loans? A Suncorp Bank home lending specialist can help answer your questions, and all consultations are 100% obligation-free.

Talk to a home loan expert

Published 25 February 2021

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*Terms and conditions for Home Loan Cashback are contained in the Registration form you need to complete to access Home Loan Cashback, your Home Loan Credit Credit Contract and, if applicable, Internet Banking Terms and Conditions and Suncorp Bank App Terms and Conditions. Please read these conditions carefully. Available Cashback may exclude any recent cheque, direct debit or pay at post payments and external transfers cannot be performed using online Cashback. Fixed Rate Home Loans are excluded from Cashback.

The information is intended to be of a general nature only and any advice has been prepared without taking into account your particular objectives, financial situations or needs, so you should consider whether it is appropriate for you before acting on it. We do not accept any legal responsibility for any loss incurred as a result of reliance upon it – please make your own enquiries.

Eligibility criteria will apply to all home loan features mentioned in this article. Not all of the features suggested in this article will be available to all customers. Information is intended to be of a general nature only and any advice has been prepared without taking into account any person's particular objectives, financial situation or needs.

Home Loans are provided by Suncorp-Metway Ltd ABN 66 010 831 722 AFSL No. 229882 Australian Credit Licence 229882 (“Suncorp Bank”) to approved applicants only. Please read the relevant Product Information Document, Lending Fees and Charges and Home Package Plus Terms and Conditions before making a decision regarding any Suncorp Bank products. Fees, charges, terms and conditions apply and are available on request or on our Product Information Documents and Forms page.