Powered by MOMENTUM MEDIA
subscribe to our newsletter

AMP modelling shows impact of extra repayments

An extra $50 per week in mortgage repayments could shave nearly $47,000 off the total interest paid over the life of an average home loan, according to new modelling.

Modelling from AMP Bank has revealed that an owner-occupier with a 30-year, $400,000 mortgage could save $46,992 in interest and pay off the loan four years faster if they contributed an extra $50 per week. This is assuming they are paying a discounted variable rate of 4.68 per cent p.a. 

The chief executive of AMP Bank, Sally Bruce, said: “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.

“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.”

According to AMP modelling, an extra $50 contribution per week on a 30-year, $300,000 home loan could result in mortgagors paying $44,150 less in interest, and cut five years and one month off a loan term.

Advertisement
Advertisement

An extra $20 per week could result in total interest savings of $20,671 and a loan term that is two years and four months shorter, and an additional $100 per week could mean $71,236 in interest savings and eight years and five months off the 30-year loan term. 

For a 30-year, $500,000 home loan, an extra $50 per week could save borrowers $48,887 in interest and shorten their loan term by three years and four months. These figures drop to $21,281 and one year and nine months when paying an additional $20 per week, while rising to $78,828 and six years and 11 months when contributing an extra $100 per week. 

Interest savings of $53,203 could be generated by paying an extra $50 per week on a 30-year, $1,000,000 mortgage, while reducing the loan term by one year and nine months.

These figures fall to $22,480 and nine months when paying an additional $20 per week, while increasing to $97,774 and three years and four months when contributing an extra $100 per week. 

“We know no two home loan customers are the same,” Ms Bruce noted.

PROMOTED CONTENT


“We encourage anyone with a mortgage to consider their personal financial circumstances before deciding whether making extra repayments is right for them.”

[Related: ANZ the last major bank to cut savings rates]

AMP modelling shows impact of extra repayments
AMP
mortgagebusiness

Grow your business exponentially in 2022!

Discover the right strategies to build a more structured, efficient and profitable businesses at The Adviser’s 2022 Business Accelerator Program.

Visit the website here to secure your ticket.

Reporter

If you have any news, ideas or enquiries for Mortgage Business - please contact This email address is being protected from spambots. You need JavaScript enabled to view it.

Latest News

Mortgage Business’ sister brand The Adviser’s Australian Broking Awards 2021 recognised the crème de la crème of the mortgage and fina...

Australian capital city dwelling prices will peak in the first half of 2022, according to a research firm, which has tipped further APRA int...

The Customer Owned Banking Association has welcomed moves for greater banking regulations, suggesting a regulatory initiatives grid could be...

Join Australia's most informed brokers

Do you know which lenders are providing brokers and their customers with the best service?

Use this monthly data to make informed decisions about which lenders to use. Simply contribute to the survey and we'll send you the results directly to your inbox - completely free!

Do you think APRA's bank buffer changes will see more borrowers use non-banks?

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.