How are home loan repayments calculated?
Principal-and-interest repayments are calculated so that the loan balance is repaid over the selected term at the entered interest rate. Each repayment includes interest for the period and an amount that reduces principal.
Monthly, fortnightly or weekly repayments
Australian lenders may offer monthly, fortnightly or weekly principal-and-interest repayments. Changing the payment frequency can change the cash-flow pattern and, depending on the lender's method, may also change how much is paid over a year.
Why does the calculator offer two frequency methods?
CommBank examples use an annualised approach for weekly and fortnightly instalments, while Westpac publishes examples where fortnightly is monthly divided by two and weekly is monthly divided by four. LoanFi lets you model either approach without implying that every product from either lender uses the same method.
How does interest-only repayment work?
During an interest-only period, the repayment covers interest but does not reduce principal. Once the interest-only period ends, the unchanged principal is repaid over the shorter remaining term, so the later principal-and-interest repayment is usually higher than it would have been if principal had been repaid from the beginning.
Loan repayment FAQs
Does this calculator use a live lender interest rate?
No. Enter the rate you want to test. The default rate is an illustration only.
Are fees included?
No. Establishment fees, package fees, ongoing account fees and other product charges are not included.
Will my lender's repayment be exactly the same?
Not necessarily. Lenders may use daily interest, different payment dates, rounding methods and product-specific rules.
Can I use the calculator for investment loans?
Yes, if you enter the relevant loan amount, interest rate, term and repayment type. It does not model tax consequences.