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Lump Sum Repayment Calculator

Our Lump Sum calculator will help you estimate how much interest you can save over the life of your loan if you make a one-off lump sum repayment into your loan facility. 

An additional lump sum repayment is one of the great strategies to help you save on interest calculated on the loan and take months or even years off your home loan. To find out how much you can pay as a one-time lump sum just simply enter the required fields. The calculator will then show you the results at the bottom.

What is a Lump Sum Repayment?

A home loan lump sum repayment relates to a sizable payment that a borrower makes towards the principal balance of their home loan. This payment is typically made in addition to the borrower’s regular mortgage payments, and serves the purpose of mitigating the total interest charged over the loan’s duration, while also reducing the loan term.

When is a Lump Sum Payment Usually Done?

Opting for a lump sum repayment can prove to be a wise course of action for borrowers who have acquired a large sum of money, such as through inheritance or work bonuses, and are keen on reducing their debt quickly.

Through a reduction in the principal balance of the loan, borrowers can lower the interest charged over the loan’s remaining term, and potentially fulfill the loan’s payment obligations earlier than originally envisaged.

Is it better to pay a lump sum or monthly?

Determining the optimal repayment method for home loans in Australia depends on the unique circumstances and financial objectives of individual borrowers.

    • Benefits of Monthly Repayments

Monthly repayments are the customary approach employed by most borrowers. These repayments are spread out across the loan’s term, comprising both principal and interest payments. This facilitates efficient financial management, enabling borrowers to allocate funds towards monthly repayments with ease.

    • Benefits of Lump Sum Repayments

Opting for a lump sum repayment towards the principal balance of the home loan can discuss numerous benefits. By reducing the principal balance, borrowers can reduce the amount of interest levied over the loan’s remaining term, resulting in significant cost savings.

Furthermore, a reduction in the principal balance can reduce the loan term, allowing borrowers to own their home as unencumbered earlier than originally intended.

How do you calculate lump sum payments?

Determine the current balance of the home loan. This can usually be found on the borrower’s most recent loan statement or by contacting the lender.

  1. Decide on the amount of the lump sum repayment.
  2. Calculate the interest savings using a Lump Sum Repayment Calculator
  3. Determine the new loan term.

Do all home loans allow lump sum repayments?

It is essential to note that not all home loans in Australia allow lump sum repayments, and the conditions and limitations surrounding these repayments can vary according to the specific loan agreement.

To ensure that borrowers avoid any potential fees or limitations, it is highly recommended that they carefully review their loan agreement or consult with their lender before making a lump sum repayment. Lenders may also impose restrictions on the maximum sum that can be repaid as a lump sum, or may impose charges for such payments.

Need Professional Advice on Lump Sum Repayments?

Are you struggling to understand how a lump sum repayment and other tips can help you pay off your home loan sooner? Our financial experts here at Excellence Finance can help you. Speak with one of our mortgage brokers today to find out more.

Disclaimer: The calculations provided by this calculator are an estimate only and do not take into account all fees and charges. Interest rates and other costs can change over time, affecting the total cost of the loan. Borrowers should consider discussing their individual situation with an Excellence Finance Mortgage Broker, a qualified Australian Credit Licensee or Authorised Credit Representative before making any decisions.

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