New modelling from AMP showed that the extra $50, on top of regular repayments, would save four years and $46,992 in interest.
According to AMP’s modelling, the figures reveal that if people pay extra or keep their repayments at the same level as interest rate decreases, it has a significant impact on their future interest bill.
AMP Bank CEO Sally Bruce believes these extra payments could help Australians save thousands.
“Many people are unaware of the powerful impact extra repayments can make to their mortgage. 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,” said Ms Bruce.
While this might not be realistic for everyone’s situation, anyone that can pay an additional $50 can greatly benefit.
“We know no two home loan customers are the same. We encourage anyone with a mortgage to consider their personal financial circumstances before deciding whether making extra repayments is right for them,” said Ms Bruce.
Adding $50: how the numbers stack up
AMP also applied the $50 method to other loan amounts, showing the marked difference the extra repayments make. They are as follows:
- $300,000 loan: Save $44,150 in interest and pay off the home loan five years and one month earlier.
- $400,000 loan: Save $46,992 in interest and pay off the home loan four years earlier.
- $500,000 loan: Save $48,887 in interest and pay off the home loan three years and four months earlier.
- $1,000,000: Save $53,203 in interest and pay off the home loan one year and nine months earlier.
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