Home loan lump sum calculator

Use our home loan lump sum repayment calculator to work out how much you can save by making a one-off lump repayment on your mortgage.

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By

Richard Whitten

Edited by

Hannah Nissen-Ellison

Updated

Fact checked
4.6 based on 835 reviews

Key takeaways

  • A one-off lump sum repayment towards your home loan can save you money on interest and help you pay your home off sooner.
  • You can use our home loan lump sum calculator to see what difference that payment could make to your loan.
  • Using an offset account is a good alternative to making a lump sum payment, as you can easily access the funds while saving on interest.

How to use the home loan lump sum calculator

In order to use the lump sum calculator, you’ll need the following details:

  • Your loan amount. This is the amount of money you borrowed.
  • The loan term. This is the original length of your home loan. Most Australians choose between 20 and 30-year loan terms.
  • The interest rate. The loan's interest rate determines how much interest you pay on top of the loan principal.
  • The repayment frequency. Repayments can be weekly, fortnightly, or monthly, depending upon your agreement with your lender.
  • Lump sum repayment. Enter the single amount you wish to add to the loan as a lump sum repayment.
  • Lump sum made at year. This refers to when you make the lump sum repayment. If you're making the payment 2 years into your loan, select 2 years.

Once you input all of the necessary information into the calculator, hit 'calculate' and you'll see your new loan term and how much interest you'll save.

Want to make multiple frequent payments instead?

Use our extra repayments calculator to see how much you could save.

Let's go!

Example: Susan's lump sum home loan repayment

Susan just inherited $10,000 unexpectedly. She decides to pay it as a lump sum toward her mortgage. In order to figure out exactly what effect a lump sum will have she uses a lump sum calculator.

Susan inputs her:

  • Original loan amount: $600,000
  • Interest rate: 5.00%
  • Loan term (30 years) and her repayment frequency (monthly)
  • Her $10,000 lump sum mortgage repayment
  • The year of her loan she's making the repayment: 4 years

In this scenario, Susan will save $25,828.68 in interest and take 11 months off her loan.

* This is a fictional, but realistic, example.

According to Finder's Wealth Building Report in 2024, 9% of investors said that paying off their debt contributed the most to their net wealth.
Source: Finder's Wealth Building Report

How an offset account can be an alternative to a lump sum payment

If you have come into a large sum of money, you can also put it in an offset account (if your home loan has one, of course). You'll enjoy a similar benefit to the lump sum payment but with greater flexibility.

An offset account is a bank account connected to your home loan. Any money that you save in it will be offset against your loan. So you're paying interest on the amount of your home loan minus that cash.

This has the same benefit as a lump sum repayment but with a huge difference. Once you pay the lump sum into your home loan, it's gone. Your lender may let you access some of it via a redraw facility but it's their money now.

With an offset account you still retain total control over the cash while paying the same as if you'd put the money towards the loan. So if you suddenly need some money to cover an urgent expense, it's right there.

If your loan doesn't have an offset account, you're confident you won't need to access the funds, or you know you can access it easily via redraw, then making a lump sum mortgage repayment is not a bad idea. Getting out of debt faster is always wise.

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Our expert says: Consider your self-control

"When considering whether you should put a large sum of money towards your home loan or into your offset account there's a key difference that you need to weigh up: accessibility.

Often touted as a benefit of the offset account, any money you put in here can be accessed like any transaction account. This is great if you think you might need the cash soon or you'd like it close by for emergencies, but it can also make it too easy to access. If you'd rather keep the money at arm's length so you know you won't spend it, making a lump sum payment could be what's best for you. You could still access it via a redraw facility if you ever need to in an emergency. Just check your lender's policy on redraw fees and limits."

Rebecca Pike's headshot
Editor, Money

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Frequently asked questions about home loan lump sum repayments

What is Finder Score?

The Finder Score crunches 7,000 home loans across 120+ lenders. It takes into account the product's interest rate, fees and features, as well as the type of loan eg investor, variable, fixed rate - this gives you a simple score out of 10.

To provide a Score, we compare like-for-like loans. So if you're comparing the best home loans for cashback, you can see how each home loan stacks up against other home loans with the same borrower type, rate type and repayment type. We also take into consideration the amount of cashback offered when calculating the Score so you can tell if it's really worth it.

Read the full breakdown

To make sure you get accurate and helpful information, this guide has been edited by Hannah Nissen-Ellison as part of our fact-checking process.
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Senior Money Editor
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Richard Whitten is Finder’s Senior Money Editor, with over eight years of experience in home loans, property, credit cards and personal finance. His insights appear in top media outlets like Yahoo Finance, Money Magazine, and the Herald Sun, and he frequently offers expert commentary on television and radio, helping Australians navigate mortgages and property ownership. Richard started his career in education and textbook publishing in South Korea. He holds multiple industry certifications, including a Certificate IV in Mortgage Broking (RG 206) and Tier 1 and Tier 2 certifications (RG 146), as well as a Bachelor of Education from the University of Sydney and a Graduate Certificate in Communications from Deakin University. See full bio

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Richard has written 764 Finder guides across topics including:
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2 Responses

    gareth's avatar
    garethJuly 8, 2013

    hi, we are about to receive a 100k lump sum we have two home loans on the one property 213k at 5.45% and 129k at 5.69% also a 7k personnel loan at 16.4%. into which loan(s) should we place the money

      Shirley's headshotFinder
      ShirleyJuly 9, 2013Finder

      Hi Gareth,

      Thanks for your comment.

      Since finder.com.au is a comparison website we’re not licensed to give any personalised financial advice. You may want to consider speaking to a financial advisor.

      Cheers,
      Shirley

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