Mortgage Repayment Calculator

Standard mortgage repayments use the PMT formula (also called the amortisation formula). Each repayment is split between interest (charged on the outstanding balance) and principal reduction.

The formula:

PMT = P × (r × (1 + r)^n) / ((1 + r)^n − 1)

Where P is the loan amount, r is the periodic interest rate (annual rate ÷ payments per year), and n is the total number of payments.

Early in the loan, most of each repayment goes to interest. Toward the end, almost all of it reduces the principal.

Mathematically, fortnightly typically saves the most — but only if your lender calculates fortnightly as "annual ÷ 26" (which means you make 26 payments instead of effectively 24 monthly equivalents). Always check.

The savings come from two sources:

• Less interest accrued between payments (compounding works in your favour)
• If your lender treats half a monthly payment as a fortnightly payment, you make ~one extra monthly equivalent per year

On a $600,000 loan at 6.25% over 30 years, switching from monthly to "true" fortnightly can save roughly $90,000 in interest and shave 4–5 years off the loan.

An offset account is a transaction or savings account linked to your home loan. Money sitting in the offset is subtracted from your loan balance when calculating interest each day.

Example: $500,000 loan with $50,000 in offset → interest is calculated on $450,000.

The savings compound over time. $50,000 in offset on a 6.25% loan saves about $3,125 per year in interest — tax-free (unlike savings interest). It's typically the best place to park emergency funds and short-term savings.

Some lenders charge a higher rate for offset-equipped loans. Check whether the offset savings outweigh the rate premium.

For variable-rate loans, extra repayments are almost always free and unlimited. They reduce the principal directly, which compounds into massive interest savings.

For fixed-rate loans, most lenders cap extra repayments at $10,000–$30,000 per year. Going over the cap can trigger break costs (fees calculated on the difference between your fixed rate and current market rates).

If you're locked into a fixed rate and want to make large extra payments, ask your broker about a "split loan" — part fixed, part variable — so you can dump extra money into the variable portion.

The comparison rate bundles the advertised rate with most fees (establishment, ongoing, valuation) into a single all-in percentage, calculated on a standard $150,000 / 25-year loan as required by Australian law.

It exists to stop lenders advertising a deceptively low headline rate while charging high fees. Always compare lenders by comparison rate, not headline rate.

Caveat: comparison rate is calculated on a standard loan size. For a $1 million loan, the fee impact is much smaller as a percentage — so the headline rate is closer to your actual cost.

Lenders work backward from your servicing capacity:

1. Take your gross income
2. Subtract income tax + Medicare + HECS
3. Subtract your Household Expenditure Measure (HEM) or actual living expenses, whichever is higher
4. Subtract existing debt repayments (credit cards, personal loans, other home loans)
5. Apply a buffer of ~3% on top of the actual rate (APRA rule) to test affordability if rates rise
6. Whatever remains is the maximum repayment they'll lend you, working back to a loan amount

For a $90,000 single income with no debts and standard expenses, max borrowing is typically $450,000–$550,000 in 2026.

Lenders Mortgage Insurance (LMI) protects the lender (not you) if you default. It's compulsory for most loans where your deposit is under 20% (LVR > 80%).

LMI on a typical 90% loan can be $10,000–$30,000, often added to the loan balance.

Ways to avoid it:

• Save a 20% deposit
• Use a guarantor (usually parents) for part of the loan
• Buy under the First Home Guarantee scheme — government acts as guarantor for up to 15% of the loan
• Some lenders waive LMI for specific professions (doctors, accountants, lawyers, engineers)