Work out exactly what you'll repay each week, fortnight, or month — and how much interest you'll pay over the life of the loan. Built for Australian borrowers, with full support for offset accounts, extra repayments, and interest-only periods.
How mortgage repayments are calculated in Australia
Every Australian lender uses the same underlying formula to work out your repayment — the standard amortisation formula:
Repayment = P × r × (1 + r)^n / ((1 + r)^n − 1)
Where P is the principal (the loan amount), r is the periodic interest rate (the annual rate divided by the number of payments per year), and n is the total number of payments over the loan term.
Three things change your repayment, and only three: the rate, the term, and the frequency. Move any one of them and the answer moves with it. A 0.25% rate change on a $600,000 loan over 30 years shifts the monthly repayment by about $94 and the total interest paid by roughly $34,000 — small percentages, big dollar consequences over three decades.
Australian lenders typically charge interest daily but settle it monthly, which is why the calculator's monthly view is closest to your statement. Weekly and fortnightly views simply divide the monthly figure into smaller chunks while preserving the same annual outflow — except, as we'll see below, when fortnightly is configured to produce 26 payments per year instead of 24.
Principal & interest vs interest-only repayments
A Principal & Interest (P&I) repayment chips away at both your interest charge and your balance every period. It's the default for owner-occupier loans because, by the end of the term, you've actually paid the loan off.
An Interest-Only (IO) repayment covers just the interest charge. Your balance stays exactly where it started until the IO period ends. Repayments are lower, but you're not building any equity through the loan itself.
When IO genuinely makes sense:
- Investment properties where the interest is tax-deductible and you're banking on capital growth, not equity build-up
- Short-term cashflow gaps — parental leave, a planned career break, a renovation period
- Bridging finance while you're between two properties
The trap with interest-only loans is the rollover: when the IO period ends (typically 1–5 years), the loan reverts to P&I — but over a shorter remaining term. A 5-year IO period on a 30-year loan means the P&I phase has to clear the full principal in 25 years, which can lift your repayment by 30% or more overnight. Stress-test the rollover repayment, not just the IO repayment, before locking in.
Weekly, fortnightly, or monthly: which is cheapest?
The conventional wisdom — fortnightly saves you money — is right, but only because of how lenders configure the schedule.
Most lenders calculate your monthly repayment first, then let you split it. There are two ways they can do that:
| Frequency | How it's set | Annual outflow | Interest impact |
|---|---|---|---|
| Monthly | Standard | 12 × monthly | Baseline |
| Fortnightly (true) | Annual outflow ÷ 26 | Same as monthly × 12 | None — equivalent |
| Fortnightly (half-monthly) | Monthly ÷ 2, paid 26 times | Monthly × 13 | Saves ~5 years, ~$90k interest on a $600k loan |
| Weekly (half of half-monthly) | Half-monthly fortnightly ÷ 2 | Same as half-monthly fortnightly | Same as half-monthly fortnightly |
Most Australian lenders default to half-monthly fortnightly: they take the monthly repayment, halve it, and bill it 26 times a year. That's 26 × half-monthly = 13 monthly payments per year — one extra payment, every year, for the life of the loan. On a $600,000 loan at 6.0% over 30 years, that single change knocks roughly five years off the term and saves around $95,000 in interest.
Worked example, $600,000 loan over 30 years at 6.0% p.a.:
- Monthly P&I: ~$3,597 per month, ~$695,000 total interest
- Fortnightly (half-monthly): ~$1,799 per fortnight,
$600,000 total interest ($95,000 saved, ~5 years shorter)
Toggle between frequencies in the calculator above to see the effect on your own numbers.
How extra repayments save you money
Every extra dollar you pay above the minimum lands directly on the principal — and because interest is charged on the principal, every dollar of principal you remove is a dollar that never accrues interest again. The effect compounds.
A $50-per-week extra repayment on the same $600,000 / 30-year / 6.0% loan saves approximately seven years off the term and around $130,000 in interest. The earlier in the loan you start, the bigger the compounding gain — extra repayments in year 1 are worth far more than the same dollar in year 25.
Two practical rules:
- Variable loans only. Most fixed-rate loans cap extra repayments at $10,000–$30,000 per fixed period. Check your contract before doubling up.
- Offset achieves the same outcome with more flexibility. Money in offset reduces interest exactly the way an extra repayment does — but you can withdraw it. Use offset if you want optionality; use extra repayments only if you've already maxed offset and want forced discipline.
Model the exact saving with the Extra Repayment Calculator.
How offset accounts work (and when to use one)
An offset account is a transaction account linked to your home loan. The balance in the offset is subtracted from the loan principal when interest is calculated each day, but the loan balance itself doesn't change.
Example: $600,000 loan, $30,000 in offset. Interest accrues on $570,000, not $600,000. At 6.0% that's a $1,800 saving in year one — and the offset balance stays liquid, so it doubles as your emergency fund.
Offset is most valuable when:
- You have a meaningful balance sitting in transactions (your salary, savings buffer, investment cash)
- You're on a variable rate (most fixed loans don't permit offset)
- You're an owner-occupier — investors often prefer redraw for tax reasons
Run scenarios with the Offset Account Calculator to see the break-even balance for your loan.
Comparison rate vs advertised rate
The advertised rate is what the lender uses to calculate your interest. The comparison rate is the same rate plus most fees expressed as an effective annual percentage. Australian lenders are required to display the comparison rate alongside the advertised rate in any rate quote, under the National Consumer Credit Protection Act 2009 and the National Credit Code (enforced by ASIC).
Two loans at the same 5.99% advertised rate can have wildly different comparison rates if one carries a $395 annual package fee and the other doesn't. On a $250,000 loan over 25 years, the comparison rate spec gap is typically 0.10–0.30%.
When you're comparing offers, the comparison rate is what matters — but only as a starting filter. The standard comparison rate calculation assumes a $150,000 loan over 25 years; if your loan is materially different (most are), the relative ranking can change.
For a side-by-side ranked comparison of multiple offers, use the Loan Comparison Calculator.
Frequently asked questions
How accurate is this mortgage repayment calculator?
The maths is exact — it uses the same amortisation formula every Australian lender uses to schedule repayments. The variance comes from your inputs. If your lender charges fees that aren't in the rate (annual package fees, redraw fees, valuation costs), those won't appear. Comparison rates fold those in; the advertised rate doesn't. Use this as a planning tool, then verify with your lender's quote.
Does this include Lenders Mortgage Insurance (LMI)?
No — LMI is calculated separately based on your Loan-to-Value Ratio (LVR) and lender. If you're borrowing more than 80% LVR, expect LMI of roughly 1–4% of the loan amount, capitalised onto the loan. Add the LMI premium to your loan amount before entering it here, or use a dedicated LMI calculator first.
Can I model an offset account?
Yes. Enter your average offset balance and the calculator reduces the principal on which interest accrues. Note that offset benefits compound — even $20,000 sitting in offset on a $600,000 loan at 6% saves roughly $1,200 in interest in the first year, more in later years as the balance grows.
What's the difference between this and a borrowing power calculator?
This calculator tells you what a known loan amount will cost to repay. A borrowing power calculator works in the opposite direction — it estimates the maximum a lender would lend you given your income, expenses, and debts. Use the borrowing power calculator first to find your ceiling, then this one to model the repayment on that loan size.
Do I include stamp duty in my loan amount?
Only if you're capitalising it. Most buyers pay stamp duty from their cash deposit at settlement, in which case it sits outside the loan. If you're rolling it into the loan (lender permitting), add it to the loan amount before entering. Use a stamp duty calculator to estimate the figure for your state.
What interest rate should I use?
Your lender's quoted rate, not the headline rate from comparison sites. If you don't have a quote yet, plug in the average 2026 owner-occupier variable rate as a starting estimate, then adjust ±0.5% to stress-test affordability. Investment loans typically sit 0.2–0.4% above owner-occupier rates.
Does this calculator work for investment loans?
Yes. The repayment maths is identical for owner-occupier and investment loans — you just plug in the investment rate. For full investment modelling (rental income, deductions, negative gearing), pair this with a negative gearing calculator.
How do I use this for a refinance scenario?
Enter your current outstanding balance as the loan amount, your new lender's rate, and your remaining term. Compare the result against your current repayment to see the monthly saving. Don't forget to net out switching costs (discharge fees, new application fees) — a refinance calculator handles this comparison directly.
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Last updated: 27 April 2026