Australian Mortgage Repayment Optimizer

Extra repayments reduce your principal faster, meaning less interest accrues. For example, on a $600,000 30-year loan at 6%, paying an extra $500/month saves approximately $180,000 in interest and cuts the loan term by about 8 years. The Softstribe Mortgage Optimizer calculates your exact savings based on your loan details.

An offset account is a transaction account linked to your mortgage. The balance in the offset account reduces the principal on which interest is calculated. If you have a $500,000 mortgage and $50,000 in offset, you only pay interest on $450,000. It is as effective as making extra repayments but the funds remain accessible.

Refinancing is beneficial when the interest saving over the remaining loan term exceeds the refinancing costs (discharge fees, application fees, lender's mortgage insurance if LVR rises). As a rule of thumb, if you can reduce your rate by 0.5% or more and plan to stay in the property for at least 2-3 years, refinancing likely saves money.

Principal and Interest (P&I) repayments pay down both the loan balance and interest each month, building equity. Interest-only repayments only cover the interest, leaving the principal unchanged. Investors sometimes use interest-only to maximise tax deductions, but pay more total interest over the loan life.