Can I increase my home loan repayments?
Learn how increasing your home loan repayments works, the benefits of extra repayments, and how they can reduce interest and shorten your loan term.
Yes. Most variable rate home loans let you pay more than the minimum repayment, with no penalty. Making extra repayments reduces your loan balance faster, which lowers the total interest you pay and can shorten your loan term by years.
How do extra repayments work?
When you pay more than the minimum, the extra goes straight towards reducing your loan principal. Home loan interest is calculated daily on the outstanding balance, so the faster you reduce that balance, the less interest you’re charged.
The benefits compound over time:
- Reduce your principal faster - more of each future repayment goes to principal rather than interest
- Lower total interest - even small extra amounts can save thousands over the life of the loan
- Build equity sooner - improving your LVR, which may unlock better rates if you refinance
Extra repayments example
Say you have a $500,000 loan at 6.0% p.a. over 30 years. Your minimum monthly repayment is about $3,000.
If you pay an extra $200 per month:
- You’d pay off the loan roughly 4 years earlier
- You’d save approximately $75,000 in total interest
Even an extra $50 per week makes a meaningful difference. The key is starting early -extra repayments in the first 5–10 years have the biggest impact.
Are there limits on increasing repayments?
It depends on your loan type:
- Variable rate loans - most lenders allow unlimited extra repayments with no penalty
- Fixed rate loans - some lenders may cap extra repayments (often $10,000–$30,000 per year) and charge fees if you exceed the limit
With Unloan, there are no limits on extra repayments and no fees for making them.
Can switching to fortnightly repayments help?
Yes. Switching from monthly to fortnightly repayments is one of the simplest ways to pay off your loan sooner if your lender calculates fortnightly repayments as being half of the monthly repayment amount.
As there are 26 fortnights in a year, making fortnightly repayments could result in making the equivalent of an extra month of repayments each year, depending on how your lender calculates repayments.
On a $500,000 loan at 6.0% p.a., switching to fortnightly repayments could save you thousands in interest and cut years off your loan term.
Do extra repayments shorten your loan term?
Yes. Extra repayments reduce your principal faster, which means less interest accrues. Over time, this shortens your loan term.
Your minimum repayment usually stays the same, but your loan is paid off earlier. For example, consistent extra repayments of $200/month on a 30-year loan could reduce it to roughly 26 years.
What happens to extra repayments?
If your loan has a redraw facility, your extra repayments sit in the loan and can be accessed later. This gives you a safety net if you need the funds.
If you redraw, your loan balance increases again, and interest is calculated on the higher amount. So, redrawing reduces the benefit of those extra repayments.
Unloan offers a fee-free redraw facility with unlimited online access. You can make extra repayments to reduce interest and still access those funds if you need them. Learn more about Unloan’s redraw facility.
What’s the difference between extra repayments and an offset account?
Both strategies reduce interest. Both can reduce the interest you pay and help you pay off your loan faster, but they work differently and suit different needs.
It depends on whether you prioritise paying down your loan faster (extra repayments) or having flexible access to your money (offset).
Is increasing repayments the same as a loan top-up?
No. They’re opposite actions:
- Extra repayments - you pay more into your loan, reducing your balance and total interest
- Top-up - you borrow additional funds, increasing your balance and total interest
A top-up requires a new lending assessment. Extra repayments don’t.
If you need additional funds, learn more about Unloan’s home loan top-up. Eligible borrowers can apply to increase their loan amount, with no application fees.
Can increasing repayments affect your LVR?
Yes. Extra repayments reduce your loan balance, which improves your LVR - especially if your property value stays stable or increases.
A lower LVR can:
- Unlock better interest rates if you refinance
- Help you avoid LMI on a future loan
- Give you more equity to access through a redraw or top-up
What should you consider before increasing repayments?
Before committing to higher repayments, think about:
- Your loan type - variable loans usually allow unlimited extras; fixed loans often have caps and fees
- Your cash flow - make sure you can sustain the higher repayments without financial stress
- Emergency access - if your loan has a redraw facility, you can access extra repayments later if needed
- Offset vs extra repayments - if you need everyday access to your savings, an offset may be more suitable
- Other debts – if you have higher-interest debts (credit cards, personal loans), it may be better to pay those off first
Should you make lump sum or regular extra repayments?
Both work. The best approach depends on your situation:
- Regular extra repayments - even $50–$100 per week compounds significantly over time. Best for steady, long-term savings
- Lump sum payments - applying a tax refund, bonus, or inheritance directly to your loan creates an immediate balance reduction
Either way, the earlier you start, the more you save. Don’t wait to accumulate a lump sum if you can make regular extras now.
With Unloan, you can make unlimited extra repayments with no fees — on both variable and fixed rate loans. Plus, your extra repayments are accessible anytime through our fee-free redraw facility.
Use our repayment calculator to see how extra repayments could reduce your loan term and total interest.
Unloan is a division of Commonwealth Bank of Australia.
Applications are subject to credit approval, satisfactory security and you must have a minimum 20% equity in the property. Minimum loan amount $10,000, maximum loan amount $10,000,000, and total borrowings per customer across all Unloan loans is $10,000,000. (For purchase loans a minimum 10% equity is required - however a Lenders Mortgage Insurance (LMI) premium and higher interest rate apply. In some cases, depending on the property’s location or type, an LMI premium may also be required for LVR between 70.01% to 80%). For loans with Lenders Mortgage Insurance (LMI) the minimum loan amount is $10,000, maximum loan amount is $3,000,000 and total borrowings per customer across all Unloan loans is limited to $3,000,000).
Unloan offers a 0.01% per annum loyalty discount on the Unloan Live-In rate or Unloan Invest rate upon settlement. On each anniversary of your loan’s settlement date (or the day prior to the anniversary of your loan’s settlement date if your loan settled on 29th February and it is a leap year) the margin discount will increase by a further 0.01% per annum up to a maximum discount of 0.30% per annum. Unloan may withdraw this discount at any time. The discount is applied for each loan you have with Unloan.
*At Unloan, we do not charge any annual, application, banking, account, transaction, late or exit fees. In certain circumstances you may be required to pay a Lenders Mortgage Insurance (LMI) premium. Learn more about why this is applied and how it works. Government fees may also apply. Learn more about government fees here. Your current lender may charge an exit fee when refinancing.
Unloan is a division of Commonwealth Bank of Australia, and Commonwealth Bank does not provide tax (financial) advice under the Tax Agent Services Act 2009 (Cth). You should consider seeking independent tax advice from a registered tax agent, accountant or adviser before you make any decisions based on this information.
Applications are subject to credit approval, satisfactory security and you must have a minimum 20% equity in the property. Minimum loan amount $10,000, maximum loan amount $10,000,000, and total borrowings per customer across all Unloan loans is $10,000,000. (For purchase loans a minimum 10% equity is required - however a Lenders Mortgage Insurance (LMI) premium and higher interest rate apply. In some cases, depending on the property’s location or type, an LMI premium may also be required for LVR between 70.01% to 80%). For loans with Lenders Mortgage Insurance (LMI) the minimum loan amount is $10,000, maximum loan amount is $3,000,000 and total borrowings per customer across all Unloan loans is limited to $3,000,000).
Unloan offers a 0.01% per annum loyalty discount on the Unloan Live-In rate or Unloan Invest rate upon settlement. On each anniversary of your loan’s settlement date (or the day prior to the anniversary of your loan’s settlement date if your loan settled on 29th February and it is a leap year) the margin discount will increase by a further 0.01% per annum up to a maximum discount of 0.30% per annum. Unloan may withdraw this discount at any time. The discount is applied for each loan you have with Unloan.
*At Unloan, we do not charge any annual, application, banking, account, transaction, late or exit fees. In certain circumstances you may be required to pay a Lenders Mortgage Insurance (LMI) premium. Learn more about why this is applied and how it works. Government fees may also apply. Learn more about government fees here. Your current lender may charge an exit fee when refinancing.
Applications are subject to credit approval, satisfactory security and minimum deposit requirements. Full terms and conditions are found on our Unloan Terms and Conditions. Modified Terms and Conditions will be set out in our Notice of Variation Agreement, if you are approved. This article is intended to provide general information only. It does not have regard to the financial situation or needs of any reader and must not be relied upon as financial product advice.
