Mortgage Repayment Calculator

A principal and interest loan is repaid using a standard amortisation formula. Each repayment is the same amount, but the split changes over time. Early on, most of each payment goes to interest because the balance is high. As the balance falls, more of each payment goes to reducing the loan itself.

The calculator works out the interest rate for each repayment period from your annual rate. For weekly and fortnightly repayments, it uses the matching weekly or fortnightly rate rather than simply dividing a monthly repayment. That is how most lenders calculate them, and it gives a more accurate picture.

For an interest-only loan, you pay just the interest for the interest-only period. After that, the loan switches to principal and interest over the remaining term. Because the full balance is repaid over fewer years, repayments jump when the interest-only period ends.

Three things drive your repayment: the loan amount, the interest rate and the loan term. A bigger loan or a higher rate means bigger repayments. A longer term means smaller repayments, but you pay much more interest overall, because the balance takes longer to come down.

Small rate differences add up. Half a percentage point on a $600,000 loan can mean tens of thousands of dollars in interest over 30 years. That is why it’s worth reviewing your rate every year or two, and why refinancing can make sense when the numbers stack up.

Any extra money you put into the loan goes straight to reducing the balance. Every future repayment then has less interest to cover, so more goes to principal. The effect compounds, and even modest extra payments can take years off a loan.

Enter an extra amount per period to see the time and interest saved. The chart shows both scenarios: the standard loan balance and the faster path with extra repayments. If your loan has an offset account, money held there has a similar effect, because it reduces the balance interest is charged on.

Don’t assume fortnightly repayments are always cheaper. They only save money if the fortnightly amount is half the monthly repayment, which produces the equivalent of one extra monthly payment each year. Many lenders calculate fortnightly repayments differently, so check how yours works.

Remember that variable rates change. Your repayment today won’t necessarily be your repayment in a year, so build in some room. Also check whether your loan allows extra repayments without fees. Many fixed rate loans cap them.

Finally, the calculator doesn’t include fees, insurance or rate changes. It’s a guide to the shape of your loan, not a quote.