How much time the RBA rate cut will save you

Today's rate cut from the RBA is long awaited by many. With it will come a slew of talk about how much money the average punter will save. But if you're like me and want to maintain the same repayments regardless of the interest rate, you'll want to know how much quicker you can pay off your mortgage.

Today's rate cut is 0.25%. With most retail interest rates around the 6% mark, this will be a saving of about $80 a month, on a $500,000 mortgage.

However, if we maintain the same repayments we can look at how this will affect the time it takes to pay off the mortgage.

The following chart compares a $500,000 mortgage with $4000 repayments at a 6% interest rate and what would be the new 5.75% interest rate.

At the 6% interest rate, you'll pay off the mortgage in 16 years and 6 months. At the new interest rate you'll reach the end a whole 4 months faster!

Not quite as exciting as I'd hoped for! But maybe with a few more cuts we might be able to shave off a few years.

Try out my mortgage calculator for yourself below: