Extra mortgage repayments: how much they save and bank limits

Regular extra repayments are one of the most effective ways to cut the cost of a mortgage, because every extra dollar goes straight off the principal and stops attracting interest. On a $600,000 loan over 30 years at 5.06% (the average one-year fixed rate, rates as at 10 November 2026), the repayment is $3,242.97 a month. Adding $250 a month saves about $97,871 of interest and finishes the loan 4 years and 5 months sooner, if the rate stays the same. On a floating rate you can pay extra whenever you like. On a fixed rate, banks allow only so much without a break fee: ANZ lets you lift repayments by up to $250 a week plus a 5% lump sum each year, and BNZ and Kiwibank allow up to 5% a year. We have not confirmed ASB's or Westpac's allowances.

Why extra repayments save so much

On a table loan, your regular repayment is set to cover each period's interest and repay the loan exactly by the end of the term (see how mortgage repayments work). Anything you pay on top of that skips the interest entirely and comes straight off the balance. The next period's interest is then worked out on a smaller balance, so more of your regular repayment goes to principal too. The effect compounds.

Timing matters. Early in a loan most of each repayment is interest: on our example, the first month's interest is $2,530.00 of the $3,242.97 repayment. An extra dollar paid in year one avoids interest for the rest of the loan, so it does far more than the same dollar paid in year 25.

As Kiwibank puts it, "Anything you pay over and above the minimum repayment amount is considered to be an extra repayment."

Worked examples: $600,000 over 30 years at 5.06%

Each row adds a regular extra amount to the $3,242.97 monthly repayment from the first month. The rate is held at 5.06% throughout, which on a real loan will not happen, so treat the results as a guide to scale.

Two more ways to look at it:

• Rounding up. Paying a round $3,500 a month instead of $3,242.97 (an extra $257.03) saves about $100,097 and finishes 4 years and 7 months sooner.
• Starting later still helps, but less. If you add $250 a month only from year 11, you save about $37,708 and 2 years 3 months, well under half of what the same $250 does from the start.

ANZ's handbook has an older example on the same lines: on $400,000 over 30 years at 4.00%, an extra $30 a week from the start paid the loan off in 26 years 7 months and saved $37,727 of interest. Our engine reproduces the term and gets within 0.3% on the interest.

Try your own amounts on our extra repayments calculator.

How much extra you can pay on a fixed rate

On a floating rate there is usually no limit. ANZ says "On a floating ANZ Home Loan you can make extra repayments whenever you like." On a fixed rate, the bank has set its own funding for the term, so paying the loan off faster can cost it money. Each bank allows some extra each year without a break fee. Here is what we found on the banks' own pages, in alphabetical order:

Pages read 10 November 2026. Allowances can change, and the fine print matters (for example, whether 5% is of the starting balance or the current balance, and when the year starts), so check your own loan documents before paying a large amount.

On our $600,000 example, 5% is $30,000 a year, or $2,500 a month on average, which covers every row of the table above. ANZ's $250 a week on a weekly loan is a big allowance: adding $250 a week to the true weekly repayment of $747.87 would clear the loan in about 17 years and 5 months and save about $264,091 of interest at 5.06%.

If you go over the allowance, the bank may charge a break fee, sometimes called an early repayment charge. Kiwibank says that above the limit "you may have to pay a fixed rate break cost". Our break fees guide explains how they are worked out, and the break fee calculator gives an estimate.

Ways to pay extra

• Lift the regular repayment. The simplest approach: ask the bank to set a higher automatic repayment, or set up your own extra automatic payment to the loan. It happens without thinking about it.
• Pay half the monthly each fortnight, or a quarter each week. That quietly adds one monthly repayment a year; see fortnightly vs monthly and weekly repayments.
• Keep the old repayment when rates fall. If your repayment drops at a refix, keep paying the old amount. Our refixing guide shows what that does.
• Lump sums. Bonuses, tax refunds or savings can go off the loan in one go; see lump sum repayments.
• Put part of the loan on floating. Kiwibank suggests that if you expect to repay more than the allowance, you keep part of the loan on a variable rate, where you can pay extra at any time. Our split loans guide shows how. A revolving credit or offset part does a similar job while keeping the money available.

Before you start

• Check you can get the money back if you need it. Extra repayments on a standard table loan reduce the balance, and you may not be able to take that money back out without applying to borrow again. Ask your bank. A revolving credit or offset part keeps it accessible.
• Keep an emergency buffer. Paying off the mortgage faster is less useful if an unexpected bill then goes on a credit card.
• Compare with other debts. Paying off a higher-rate debt first, such as a credit card, usually saves more per dollar.
• Know whether your minimum repayment changes. Paying extra normally shortens the loan rather than reducing the contracted repayment. If you need the lower repayment, ask the bank to recalculate it.

This guide is general information, not financial advice. Rates as at 10 November 2026, the average of the five main banks' lowest advertised one-year fixed rates in the interest.co.nz table. Our guide to paying off your mortgage early pulls these ideas together.

Questions people ask

How much do extra mortgage repayments save?

More than most people expect. On $600,000 over 30 years at 5.06%, an extra $100 a month saves about $44,150 and an extra $250 a month about $97,871, if the rate stays the same. The earlier you start, the more you save.

Can I make extra repayments on a fixed rate?

Yes, within your bank's allowance. ANZ allows up to $250 a week more plus a 5% lump sum a year; BNZ and Kiwibank allow up to 5% a year. We have not confirmed ASB's or Westpac's allowances. Above the allowance, a break fee may apply.

Is it better to pay extra regularly or as a lump sum?

The sooner money goes off the loan, the more interest it saves, so a lump sum now beats the same amount spread over the year. In practice, regular extras are easier to keep up. Many people do both.

Will my repayment go down if I pay extra?

Usually not. The extra shortens the loan instead. If you want a lower repayment, ask your bank whether it will recalculate. Our lump sum guide compares the two approaches.

Should I pay off my mortgage or save?

It depends on your rates, tax, emergency savings and goals, and this site does not give personal advice. As a general point, money off a 5.06% mortgage saves 5.06% interest with no tax on the saving.