How Your Australian Mortgage Repayments Are Calculated
A standard principal and interest home loan is repaid in equal instalments over the loan term, with each repayment split between interest on the outstanding balance and a reduction of the principal. Early on, more of each repayment goes toward interest; over time, that shifts toward principal. This calculator amortises your loan year by year and models the effect of any extra repayments on both the payoff time and total interest paid.
📋 Key Home Loan Concepts
| Item | Typical Value / Rule |
|---|---|
| Standard loan term | 25–30 years |
| LMI threshold | LVR above 80% |
| Typical variable rate (2025/2026) | Around 5.5%–6.5% p.a. |
| Stamp duty | Set by state/territory, based on price and buyer status |
| First home buyer concessions | Vary by state — check eligibility before assuming a discount |
| Fortnightly vs monthly repayments | Fortnightly repayments can shave years off a 30-year loan |
🔑 Key Terms Explained
LVR (Loan to Value Ratio): Your loan amount as a percentage of the property's value. A lower LVR generally means a lower interest rate and no LMI.
LMI (Lenders Mortgage Insurance): A one-off premium charged when your deposit is under 20%, protecting the lender — not you — if you default.
Principal and Interest (P&I): The standard repayment type where each instalment reduces both the loan balance and the interest owed, gradually paying off the loan in full.
Amortisation: The process of spreading loan repayments over time so the balance reaches zero by the end of the term.
Extra Repayments: Additional amounts paid above the minimum required repayment, which reduce the principal faster and cut the total interest charged over the life of the loan.
💡 Example: $750,000 Property, $150,000 Deposit, 6.1% Rate, 30 Years
1. Loan Amount: $750,000 − $150,000 = $600,000
2. LVR: $600,000 ÷ $750,000 = 80% (right at the LMI threshold)
3. At 6.1% p.a. over 30 years, the loan amortises into regular fortnightly repayments that cover interest first, with the principal share growing each year.
4. Adding extra repayments — even a modest amount each fortnight — can cut several years off the loan term and save a significant amount of interest over time.
Run the calculator above with your own figures to see your personalised repayment schedule and the impact of extra repayments.
⚠️ Important Notes
— This calculator assumes a constant interest rate for the full loan term — real rates move over time, especially on variable loans.
— Stamp duty and LMI estimates are indicative only and vary significantly by state, lender, and individual circumstances.
— Fees such as application, valuation, and ongoing account-keeping fees are not included in this calculation.
— Some fixed-rate loans **limit or charge break costs** for extra repayments — check your loan contract before relying on this feature.
— For an official comparison, use the ASIC MoneySmart Mortgage Calculator or speak with a licensed mortgage broker.