Mortgage repayment calculator

What the result means

A repayment keeps the loan on track to reach a zero balance at the end of the term if the rate never changes and every payment is made on time. Early payments are mostly interest; later payments are mostly principal.

How it is calculated

Repayment = P × r(1 + r)^n / ((1 + r)^n − 1), where r is the period rate and n is the number of payments

• P: Loan amount (property value minus deposit).
• r: Nominal annual rate divided by payments per year.
• n: Term in years × payments per year.

The standard amortising loan formula finds a constant payment that pays down both interest and principal. If the rate is zero, the payment is simply principal divided by the number of periods.

Worked example

An $680,000 loan over 30 years at 5.8%

A buyer purchases an $850,000 home with a $170,000 deposit, leaving a $680,000 loan over 30 years at 5.8% p.a., repaid monthly.

Loan amount

$850,000 − $170,000 = $680,000

Monthly rate

5.8% ÷ 12 = 0.4833…%

Payments

30 × 12 = 360

Monthly repayment

About $3,990

Over 30 years the borrower would repay well over a million dollars, with interest making up a large share of the total if the rate stays at 5.8%.

This is an estimate, not a bank offer

Lenders use their own compounding, charging cycles, introductory rates, offset accounts, redraw, lenders mortgage insurance and fees. A comparison rate on an advertisement tries to fold some of those costs in; this calculator does not.

Fortnightly repayments here use the annual rate divided by 26. Some lenders still calculate interest monthly and take fortnightly payments as monthly ÷ 2, which is a different schedule. Treat the result as a planning figure.

Questions