Mortgage Repayment Calculator

How the Mortgage Repayment Calculator works

Mortgage repayment calculator: the amortisation formula

A principal-and-interest home loan works on one rule: interest is charged on what you still owe. Every repayment covers the interest that has accrued since the last one, and whatever is left over reduces the balance. Early on, the balance is large, so almost the whole repayment is interest and only a sliver touches the principal. Late in the loan the balance is small, the interest charge is small, and nearly the whole repayment goes to the principal. The repayment amount never changes; what changes is the split.

Extra repayments calculator: why early dollars are worth more

This is the part that surprises people, and it is not a bank rule or a bonus — it falls straight out of the maths. A dollar you put in during the first year of a thirty-year loan is a dollar the lender never charges you interest on again, for the remaining twenty-nine years. The same dollar paid in the final year avoids one year of interest. At 6% that first dollar saves about $4.70 in interest; the last one saves about six cents. Nothing about the two dollars is different — only the amount of time they get to work. That is why an extra $200 a month on a $600,000 loan at 6.2% saves over $110,000 and clears the loan nearly four years early, while the same total amount contributed in the last few years would barely register. If you are ever going to make extra repayments, the timing matters more than the amount.

Fortnightly vs monthly mortgage repayments

Switching to fortnightly repayments is sold as a saving, and there is usually a saving — but it mostly is not coming from the frequency. The standard advice is to pay half the monthly amount every fortnight. There are 26 fortnights in a year but only 12 months, so 26 half-payments equals 13 monthly payments, not 12. You are quietly making an extra month's repayment a year, and that extra money is doing nearly all the work. Paying more often does help a little, because the balance drops sooner and less interest accrues, but it is a minor effect next to the thirteenth payment. This calculator keeps the two things separate: choosing Fortnightly divides the annual rate and term honestly, so any saving you see against Monthly is the real frequency effect. If you want to model the thirteenth-payment strategy, put the extra in the extra repayment field instead, where you can see exactly what it is worth.

Offset accounts and interest only

An offset account is a transaction account whose balance is subtracted from the loan balance before interest is charged. $50,000 sitting in offset against a $600,000 loan means interest on $550,000, but the repayment stays the same, so the difference pays down principal — it behaves like an extra repayment you can still spend. Enter the balance in the offset field and the calculator holds it constant for the whole term, which is the simplest honest assumption. Interest only changes the rule entirely: the repayment covers just the interest, the balance never falls, and at the end of the term you still owe the full amount. The calculator shows that figure as "still owing" rather than pretending the loan is finished.

Reading the amortisation schedule

The table under the result is the amortisation schedule the numbers come from. Each row shows how much of that year's repayments went to principal, how much to interest, and the balance left. Switch it to every repayment to see the individual split. It is the clearest way to see the early-years effect: in year one of a thirty-year loan the interest column dwarfs the principal column, and the two only cross somewhere past the halfway mark.

What this does not include

The figures here are the loan and nothing else. They exclude establishment and ongoing fees, lenders mortgage insurance, stamp duty, conveyancing, building insurance and council rates. They also assume the interest rate stays where you put it for the whole term, which on a variable loan it will not. Treat the total interest as a comparison figure between scenarios, not a prediction.

How much interest will I pay on my mortgage?

The worked example is a $600,000 loan at 6.2% over 30 years: the repayment is $3,674.81 a month and the interest over the full term is $722,932.99, more than the amount borrowed. The table below gives the monthly repayment per $100,000 at common rates and terms, so a $450,000 loan at 6% over 25 years is 4.5 × $644.30, or $2,899.35 a month.

Mortgage worked examples

First example. $600,000 at 6.25% over 30 years repays $3,694.30 a month, and $729,949.15 of interest over the term.

Second example. $380,000 at 5.75% over 25 years repays $2,390.60 a month, with $337,181.30 of interest.

How many repayments are there? 12 a year on monthly, so 360 over 30 years; 26 a year on fortnightly, so 780.

Related tools