Mortgage payoff 🏦

Every dollar of gap between the two lines is a dollar the bank charges interest on for years — which is why the savings compound the way they do.

Extras only — the curve holds your offset and lump sum at zero so you can see this one lever cleanly. Steepest at the start: the first $100 is the best $100.

• The repayment formula is not a mystery. The minimum is the payment that, at your rate, lands the balance on exactly zero at the end of the term. Early on almost all of it is interest; the principal only starts moving properly in the back half. That front-loading is why every trick below works best early.
• Extra repayments attack the principal directly. Each extra dollar stops earning the bank interest for every remaining year of the loan, which is why $100 a month can be worth tens of thousands — the saving is the interest that dollar would have generated, compounded to the end of the term.
• An offset reduces interest, not the repayment. Interest is charged on the balance minus whatever sits in offset. Your repayment stays the same, so more of each payment hits the principal and the term shortens. Every offset dollar effectively earns your mortgage rate, tax-free — hard to beat with a savings account that gets taxed.
• The fortnightly “trick” is just extra repayments in disguise. Paying half your monthly repayment every fortnight makes 26 half-payments — thirteen months of repayments a year instead of twelve. Model it here by switching to fortnightly and adding the difference as an extra; the frequency switch alone uses the true amortising fortnightly minimum, which is not the trick.
• Offset vs. redraw: mathematically identical while the money sits there, legally different. Offset money is yours; redraw is the bank letting you re-borrow your own extra repayments, and they can change the rules. This model treats the money as staying put either way.
• The rate is held flat. Real loans reprice every time the RBA clears its throat — the “if rates move” table shows what that does, but the projection itself assumes today’s rate for the duration.
• Not modelled: fees, interest-only periods, split loans, repayment holidays, or the willpower required to leave a fat offset account alone.

General information only, not financial advice — I’m a hacker, not a financial adviser. Check anything that matters against your actual loan contract. Your numbers stay in your browser.