At 6.36%, mortgage interest equals what you borrowed
At current interest rates, you pay nearly as much in interest over 25 years as the original loan amount.
When a mortgage sits at 6.36 per cent, where most are now, the numbers are bleak. Borrow $400,000 and you'll pay almost exactly $400,000 in interest alone over 25 years.
On a $700,000 loan, it's $700,000 in interest. The good news: several simple moves can cut this drastically.
Using an offset account to its full potential, where every dollar saved reduces your loan dollar-for-dollar, can save over $100,000 and cut two years off your loan. Paying fortnightly instead of monthly costs just a few dollars extra each fortnight but saves $134,000 and shaves a year and a half off.
Even refinancing to a rate just 0.36 per cent lower, while keeping payments the same, saves $102,000 and cuts 1.5 years. Stacking these strategies compounds the benefit.
- 6.36%
- Current mortgage interest rate
- $400,000
- Interest on $400,000 loan over 25 years
- $105,000+
- Savings from $30,000 offset on $700,000
- Nearly 2 years
- Time saved with offset strategy
Why it mattersAustralians with mortgages now have concrete ways to dramatically reduce interest costs and become mortgage-free years earlier without extra pain.
AustraliaMost Australian mortgages sit at or above 6.36 per cent, making this directly relevant to hundreds of thousands of home owners paying record interest.
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