Extra Per Month to Pay Off Your Mortgage in 20 Years
Published 31 May 2026
The short answer
On a typical $600,000 loan at 6% p.a., paying it off in 20 years instead of 30 costs roughly $700 extra per month: about $4,299/month rather than $3,597/month. That extra repayment cuts your total interest by around $263,000 over the life of the loan. The exact figure scales with your loan size and rate, so model your own numbers rather than relying on a rule of thumb.
How it works
There are two ways an Australian lender can shorten your loan term:
- Formally re-contract to a 20-year term. Your minimum repayment rises, and the lender holds you to it.
- Keep your 30-year loan but make voluntary extra repayments each month. The same total monthly payment pays the loan off on the same accelerated schedule, while you keep the flexibility to drop back to the minimum if money gets tight.
The maths is identical either way. A home loan repayment is fixed so that, paying it every month at your interest rate, the balance hits zero exactly at the end of the term. Compress the term from 360 months to 240 months and the required payment goes up. Because you clear the principal faster, the bank charges you interest for fewer years, and that is where the large saving comes from.
A key Australian detail: on a variable rate loan, most lenders let you make unlimited extra repayments for free, and the extra usually sits as available redraw. On a fixed rate loan, extra repayments are often capped (commonly around $10,000–$30,000 per year) with break costs beyond that, so check your loan's terms. See moneysmart.gov.au on extra repayments for the general principle.
Keep in mind that extra repayments and an offset account are different levers. Extra repayments reduce the loan balance directly. An offset reduces the interest you're charged (interest accrues on loan minus offset) without changing your contracted repayment, so it shortens the term only if you leave the saved interest in the loan. If you're weighing the two, see offset vs extra repayments.
Worked example — $600,000 at 6% p.a.
Using True Loan's true-periodic, principal-and-interest engine:
| 30-year loan | 20-year loan | |
|---|---|---|
| Loan amount | $600,000 | $600,000 |
| Interest rate | 6.00% p.a. | 6.00% p.a. |
| Monthly repayment | $3,597 | $4,299 |
| Extra per month | — | ~$701 |
| Total interest paid | ~$695,000 | ~$432,000 |
| Interest saved | — | ~$263,000 |
You can check this yourself. With a monthly rate of 0.06 ÷ 12 = 0.005, the standard repayment formula P × r ÷ (1 − (1 + r)⁻ⁿ) gives $3,597.30 over 360 months and $4,298.59 over 240 months, a difference of about $701/month. Over the loan's life you pay 240 × $4,299 ≈ $1.03m versus 360 × $3,597 ≈ $1.29m, so the shorter term saves roughly a quarter of a million dollars in interest despite the higher monthly payment.
A few quick scaling rules from the same maths:
- A larger loan needs more extra per month: an $800,000 loan at 6% needs about $935/month extra to hit 20 years.
- A higher rate makes the term cut cheaper in monthly terms (interest already dominates), but saves even more total interest.
Model this in True Loan
Open True Loan and set:
- Loan amount (e.g. $600,000), interest rate (e.g. 6%), term 30 years, principal & interest, monthly.
- Note the baseline repayment and total interest.
- Now type your target extra into the Extra repayment ($/month) field. Watch the remaining-debt timeline: the payoff point slides left towards year 20. Adjust the extra until the loan clears at 20 years.
To see it side by side, use the comparison tool: a 30-year loan in one column and the same loan with extra repayments in the other, so you can read the term and total-interest difference directly. Every scenario is shareable via its URL.
If you'd rather model an offset instead, use the dedicated Offset balance input. That's a separate field from extra repayments, because the two behave differently.
Common questions and mistakes
Should I shorten the term or just make extra repayments? Making extra repayments on a 30-year loan gives the same result with more flexibility, since you can pause if needed. Formally re-contracting locks in the higher minimum. Both are valid; this is general information, not advice.
Will extra repayments lower my minimum repayment? No. By default they shorten the term, not the monthly minimum. Some lenders let you "recast" to lower the repayment instead, so ask yours.
Does this work on a fixed rate? Often only up to an annual cap before break fees apply. Check your contract, or wait until you roll to variable. See what happens when your fixed rate expires and your lender's terms.
Is 20 vs 25 years a smaller jump? Yes: a 25-year payoff needs far less extra per month. Compare in 25 vs 30-year total interest, and see the full total interest on a $600k 30-year loan.
These figures are estimates for the 2025–26 Australian financial year and depend on your actual rate, fees and lender rules. Always check official sources such as moneysmart.gov.au and your loan contract. This is general information, not financial or credit advice.
This guide is general information and estimates only — not financial or credit advice. Figures vary by lender and circumstances; always confirm with official sources.