Amortisation
How your loan pays down — and why early repayments matter far more.
What is Amortisation?
Amortisation is the gradual paying down of a loan through regular repayments. Early in a loan, most of each repayment goes to interest and only a small portion reduces the principal. Later in the loan, the balance tips — more goes to principal, less to interest.
Why it matters for you
This is why extra repayments in the first 5–10 years save dramatically more interest than the same extra repayments in year 20. A single extra $5K payment in year 2 can save $15K+ in lifetime interest. Offset accounts and redraw work on the same principle.