Loan Repayment Calculator

What this calculator does

This calculator shows what a home loan costs each month, fortnight or week, based on the amount you borrow, your interest rate and the loan term. Use it to sanity-check what a lender quotes you, compare two loan options side by side, or see how much a rate rise would add before you commit.

Reading the result

Enter the loan amount, interest rate and term. The result is your regular repayment (principal and interest) plus the total interest you’ll pay over the life of the loan. The total-interest figure is the one worth watching – on a 30-year loan it’s often more than the amount you borrowed.

Example

On a $600,000 loan at 6.0% over 30 years, the repayment is about $3,597 a month, and you’d pay roughly $695,000 in interest across the full term. Drop the term to 25 years and the monthly repayment rises to about $3,866, but total interest falls by around $135,000 – the trade-off most people don’t see until they run the numbers.

What a repayment is actually made of

Every repayment splits two ways: interest, which is the bank’s fee for the money, and principal, which is the bit that actually reduces what you owe. Early on the split is brutally lopsided.

On $650,000 at 6.10% over 30 years the repayment is $3,938.97 a month. In the first month, $3,304.17 of that is interest and only $634.80 comes off the loan. You do not cross the halfway point, where more than half of each repayment goes to principal, until roughly year 19.

That is why the total interest figure is so large. Over the full 30 years you repay about $1,418,000 on a $650,000 loan. The extra $768,000 is interest.

Weekly, fortnightly or monthly

Switching to fortnightly is the oldest trick in home lending, and it works, but not for the reason most people think.

There are 26 fortnights in a year but only 12 months. If your lender lets you pay half the monthly amount every fortnight, you end up making the equivalent of 13 monthly repayments a year instead of 12. That extra repayment is what shortens the loan, not the frequency itself.

Watch the wording when a lender offers it. Some divide the monthly figure by two, which gives you the extra repayment. Others multiply your annual amount by 26 and divide, which changes nothing except the day the money leaves your account. Ask which one you are being given.

What a rate rise does to you

The calculator shows this under the table, and it is the number worth writing down. On $650,000 over 30 years, a rise from 6.10% to 7.10% takes the monthly repayment from $3,938.97 to $4,368.21. That is $429 more a month, or about $5,151 a year, out of after-tax income.

Before you commit to a loan, run it at two or three percentage points above the rate you are offered. Lenders do exactly this when they assess you, and it is a fair test of whether the loan is comfortable or merely possible.

The real cost of interest only

Interest only lowers the repayment now and raises it later, and it costs more overall because nothing comes off the balance while it runs.

Take the same $650,000 at 6.10% over 30 years. Straight principal and interest costs about $768,000 in interest. Five years of interest only first, then 25 years to repay the same balance, costs about $817,000 — roughly $49,000 more — and the repayment afterwards jumps from $3,938.97 to $4,227.78 a month because you have 25 years to clear the debt instead of 30.

That trade can still be the right call for an investor claiming the interest, or for someone with a short income gap. It is rarely the right call simply because the repayment looks easier.

What this calculator leaves out

• Fees. Application, valuation, settlement and annual package fees are not in the repayment figure.
• Lenders mortgage insurance, if your deposit is under 20%. It is usually added to the loan, so it raises both the balance and the repayment.
• Offset and redraw. Money sitting in an offset account cuts the interest charged, so your real interest bill will be lower than the figure here if you use one.
• Rate changes. This assumes one rate for the whole term, which no variable loan has ever done.

The comparison rate is the number designed to fold most of the fees back in. If you are choosing between two loans, compare those, not the headline rates. Our comparison rate calculator does that side by side.

Questions people ask

Is the interest calculated daily or monthly?

Almost every Australian home loan calculates interest daily on the balance and charges it monthly. That is why paying earlier in the month, or holding money in an offset, reduces what you are charged even if the repayment is unchanged.

Does paying extra actually help?

A lot. Because interest is charged on the balance, every extra dollar you pay early saves interest for the whole remaining term. An extra $200 a month on $650,000 at 6.10% takes roughly four years off a 30-year loan. Our extra repayment calculator shows your own numbers.

Why is the bank’s figure different from this one?

Usually fees, or the exact number of days in the month, or a package discount that applies to your rate but not the advertised one. Differences of a few dollars are normal. Differences of a few hundred mean you are comparing two different loans.

Should I take a 30-year term or a shorter one?

A shorter term costs less overall and more each month. Many people take 30 years for the flexibility of a low required repayment, then pay extra voluntarily — which gets the same result while leaving room to stop if income drops.