Jenny's Required Monthly Repayment Amount is $1,868 on a $300,000 loan with a loan term of 25 years. Over the term of the loan she'll pay a total of $22,416 in one year ($1,868 X 12), and over 25 years, Jenny will pay $560,400.
After five years, Jenny receives an inheritance of $50,000. Dividing the money, she puts $30,000 into her home loan and $20,000 into her Everyday Account, to use for an overseas holiday. Making the lump sum repayment of $30,000 means that instead of paying off her loan after 25 years, she's reduced the loan term to almost 21 and a half years - if her repayments remain the same over the years. The redraw balance will also gradually reduce in line with the loan term. Find out more about making additional repayments here.
Making a lump sum payment of $30,000 after five years reduces the loan term by approximately three and a half years. Jenny will also save over $53,000 in interest.