skip to log on skip to main content
VoiceOver users please use the tab key when navigating expanded menus

Increasing your repayments

There are many ways you can repay your loan a little bit faster by increasing your repayments. Here are some ideas that could help. 

 

Small increases to your repayments could make a big difference

Any money you pay on top of the minimum repayment amount goes straight towards paying off your principal (the money you borrowed). And the smaller your principal, the less interest costs you pay.

Take a look at the Scenario 1 example below. This example is based on a home loan of $400,000 at an interest rate of 4.00% p.a., for an initial term of 30 years. Increasing the repayments by $30 a week from the beginning of the loan would mean paying the loan off 3 years and 5 months earlier and reducing interest costs by around $37,727 over the life of the loan.1  

Scenario 1: Paying an extra $30 a week from the start
Scenario 1
Repayment Term Interest
Minimum 30 years $286,627
$30 extra a week 26 years 7 months $248,900
  Term reduced by 3 years 5 months Interest saved $37,7272

In Scenario 2, we look at what happens when you increase repayments by $60 halfway through the loan term (i.e. 15 years). This reduces the loan term by 2 years 4 months, reducing interest costs by $14,429 over the life of the loan.1

Scenario 2: Paying an extra $60 a week from halfway

Scenario 2
Repayment Term Interest
Minimum 30 years $286,627
$60 extra a week from 15 years 27 years 8 months $272,199
  Term reduced by 2 years 4 months Interest saved $14,4292

The earlier you increase your repayments, the bigger the impact

As you can see, you'll pay less interest in Scenario 1, demonstrating that the earlier you increase your repayments (or make a lump sum payment), the less you'll pay in interest over the life of your home loan. Of course, if you can only afford to increase repayments later into the loan term, it can still make an impact.

Note: if you increase your repayments during a fixed rate period you may be charged Early Repayment Recovery.  Talk to us first so we can give you an indication of the Early Repayment Recovery we'll charge.


How to increase your repayments

There are many ways you could increase your repayments. Here are some ideas that could help.

Pay what you can afford to

Regular repayments are set at an amount that will be affordable for you. Be realistic and factor in any expected lifestyle changes.

Pay more than the minimum

If you can comfortably afford to pay more than the minimum, you might like to consider increasing your regular repayments. If you do, you could pay your loan off faster and pay less interest over the life of your loan.  

Move to fortnightly or weekly repayments

If you pay monthly, consider whether you could pay half of what you are paying fortnightly instead. This means you’ll repay slightly more over the year as you will be paying the equivalent of one extra monthly repayment a year. For example, if your monthly repayments are $2,400, consider whether you could pay $1,200 a fortnight instead. Based on a loan of $400,000 at an interest rate of 4.00% p.a. for an initial term of 30 years, this would reduce your total interest cost by around $23,000 and you’d pay your home loan off 2 years earlier!1

Round up your repayments

If you’ve chosen a set loan term, the required repayments are often not round numbers. You could round them up to the nearest $10 or even $100 to pay a bit more with each repayment. For example, if your minimum fortnightly repayments are $877.67, consider whether you could pay $900 instead. Based on a loan of $400,000 at an interest rate of 4.00% p.a. for an initial term of 30 years, this would reduce your total interest cost by around $15,000 and you’d pay your home loan off 1 year and 4 months earlier!1

Review your repayments when interest rates change

Keep your repayment amount the same if interest rates fall.

 

Meet with an ANZ Home Loan Coach

ANZ Home Loan Coaches can help you set up or restructure your home loan to suit your circumstances – and help you set your repayments to pay it off faster.

Call us to book an appointment. 

0800 269 4663

ANZ lending criteria, terms, conditions, and fees apply. Interest rates and fees are subject to change.  

A copy of the Bank's General Disclosure Statement  under the Reserve Bank of New Zealand Act 1989 is available on this website or on request from any ANZ branch, free of charge.

This material is for information purposes only. Its content is intended to be of a general nature, does not take into account your financial situation or goals, and is not a personalised financial adviser service under the Financial Advisers Act 2008. It is recommended you seek advice from a financial adviser which takes into account your individual circumstances before you acquire a financial product. An ANZ Authorised Financial Adviser will, on request and free of charge, provide you with his or her disclosure statement prepared under the Financial Advisers Act 2008. If you wish to consult one of ANZ's financial advisers, please contact us on 0800 269 296.

1. The example above provides an estimate/illustration only. It is a guide on how a $400,000 home loan originally structured on a 30-year term could be paid off faster and is based on the assumption that the 4.00% p.a. interest rate remains the same for the duration of the loan. To work out the impact of increasing your home loan repayments, use our repayments calculator. Please note, if you increase your repayments during a fixed interest rate period you may be charged Early Repayment Recovery.

2. Interest saved in these examples refers to the interest cost that a customer will not need to pay as a result of making extra repayments.