Home Loan Repayment Calculator (Mortgage)

Guide

How the repayment is worked out

Interest is charged each repayment period at the yearly rate divided by the number of repayments in a year. The level repayment that clears the loan over n payments is loan × r ÷ (1 − (1 + r)⁻ⁿ), where r is the rate for one period.

For example, $600,000.00 at 6% over 30 years is $3,597.30 a month. That is 360 payments, $1,295,029.13 in all, so $695,029.13 of it is interest. The rate, term and loan amount here are placeholders, not a quote.

What is not included

This is the repayment of the loan itself, principal and interest. Fees, insurance, any package or account charges and changes to the rate are not included, and it assumes one rate for the whole term. If your rate changes, enter the new rate, the balance still owing and the years left.

Extra repayments

Anything you pay above the payment goes towards the amount you owe, so less interest is charged from then on. An extra $200 a month on the example above pays the loan off in 26 years 1 month instead of 30 years, and saves $106,692.82 of interest. Put an amount in the extra box to try your own.

Some lenders limit or charge for extra repayments on fixed-rate loans, so ask yours.

Offset accounts and one-off payments

An offset account is a transaction or savings account linked to the loan. Interest is charged on the loan less the balance in the account, so money sitting there saves interest as if it had been paid off, and you can still take it out. On the example, keeping $50,000.00 in the offset account the whole time pays the loan off in 25 years 4 months instead of 30 years and saves $202,175.26 of interest. The calculator assumes the balance stays the same for the whole loan and that the payment is unchanged, so a balance that rises or falls will change the result. Not every loan has an offset, and some charge a fee or a higher rate for one.

A one-off payment now reduces the amount you owe straight away. On the example, paying $20,000.00 on day one pays the loan off in 27 years 5 months and saves $91,647.13 of interest. You can use the one-off box, the extra box and the offset box together.

Weekly and fortnightly repayments

The Repayments box switches between monthly, fortnightly and weekly. Interest is worked out at the same frequency as the repayments, which is how the MoneySmart calculator does it (linked below). A fortnightly repayment worked out to clear the loan in the same 30 years costs almost the same overall ($694,408.44 interest against $695,029.13).

The saving people talk about comes from paying half the monthly amount every fortnight. That is 26 half payments, the same as 13 monthly payments a year. Paying $1,798.65 every fortnight on the example clears it in 24 years 6 months, not 30 years. Your lender may calculate interest differently, so check the result with them.

Common questions