Understanding your mortgage repayments
A mortgage is usually the largest loan a person ever takes on, and small differences in rate or term translate into tens of thousands of dollars over its life. This calculator shows your monthly repayment, the total amount you will repay, and the total interest charged, so you can see the true cost of a loan before you commit to it.
How to use the mortgage calculator
Enter the loan amount (the property price minus your deposit), the annual interest rate your lender is offering, and the loan term in years. The result updates instantly. Try comparing a 25-year term against a 30-year term at the same rate: the shorter term has higher monthly repayments but saves a striking amount of interest overall.
How repayments are calculated
Each repayment is split between interest (charged on your remaining balance) and principal (the amount you actually borrowed). Early in the loan most of each payment is interest; as the balance falls, more of each payment chips away at the principal. This gradual shift is called amortisation. The formula is M = P · r(1+r)n / [(1+r)n − 1], where r is the monthly rate and n is the number of monthly payments.
Ways to pay less interest
Even one extra repayment a year can shorten a 30-year loan by several years. Switching from monthly to fortnightly repayments has a similar effect, because you make the equivalent of an extra month's payment annually. Refinancing to a lower rate, or making a lump-sum payment early in the term when the balance is highest, both have an outsized impact. Remember this figure is principal and interest only — lender fees, insurance and rates are additional, so treat it as a guide rather than a quote.