Paying off a loan early
When extra payments make sense, how they work and what to check in your contract.
Extra payments shorten your loan and save interest — every euro you repay early no longer earns the bank interest.
Shorter term or lower payment?
After an extra payment, the bank can either shorten the term (same payment, ends earlier) or lower the payment (same end date). Shortening the term saves more interest; lowering the payment gives you more room every month.
Before you pay extra
- Emergency reserve first: keep three to six months of expenses available.
- Expensive debts first: credit cards and overdrafts usually cost more than a housing loan.
- Check the contract for early repayment fees and how much notice the bank needs.
How much it saves
On a 100,000 € loan at 5 % over 25 years, the monthly payment is about 585 € and the total interest about 75,000 €. Paying off a part early in the first years — when the balance and therefore the interest is highest — has the biggest effect.
Last updated October 5, 2026