Borrowers who making extra repayments to their mortgages can save a substantial amount in interest and pay off their loan significantly faster, according modelling from AMP Bank.
The data revealed that an extra $50 will allow an average home loan customer with a mortgage of $400,000 to save $46,992 in interest and pay their home loan off four years. For a $300,000 loan, an extra $50 will allow borrowers to save $44,150 in interest and pay off the home loan five years and one month earlier. And contributing an extra $50 to a $1,000,000 loan will allow borrowers to save $53,203 in interest and pay off the loan one year and nine months earlier.
Sally Bruce, chief executive officer at AMP Bank, said that the modelling revealed how making extra repayments could save Australians thousands of dollars in interest over time.
“Many people are unaware of the powerful impact extra repayments can make to their mortgage,” said Bruce. “With recent cuts to variable mortgage rates, home loan customers have a choice to make around whether to pocket the rate cut or save the extra money, or a portion of it, back into their home loan. It may be hard to believe but contributing just a small additional repayment of $20 or $50 dollars every week can result in big savings in interest over time.”