1. What is Home Loan Amortization?

Home loan amortization is the process of paying off a mortgage over time through regular payments. Each payment covers both interest and principal, with the proportion shifting over the loan term.

2. How Does the Calculator Work?

The calculator uses the amortization formula:

Where:

• \( P \) — Principal loan amount (AUD)
• \( r \) — Monthly interest rate (annual rate divided by 12)
• \( n \) — Total number of monthly payments
• \( PMT \) — Monthly payment amount

Explanation: The formula calculates the fixed monthly payment required to fully repay a loan over its term, accounting for compound interest.

3. Importance of Amortization Calculation

Details: Understanding your monthly payments helps with budgeting and financial planning. It also shows how much interest you'll pay over the loan term, which can help when comparing loan options.

4. Using the Calculator

Tips: Enter the principal amount in AUD, annual interest rate as a percentage (e.g., 3.5 for 3.5%), and loan term in years. The calculator will show your estimated monthly payment, total repayment amount, and total interest.

5. Frequently Asked Questions (FAQ)

Q1: Are Australian home loans typically amortized?
A: Yes, most standard home loans in Australia are amortizing loans with principal and interest payments.

Q2: What's the difference between principal and interest loans?
A: Principal and interest loans gradually pay down the debt, while interest-only loans maintain the principal balance for a set period.

Q3: How does loan term affect payments?
A: Shorter terms mean higher monthly payments but less total interest. Longer terms reduce monthly payments but increase total interest costs.

Q4: Are there other costs not included here?
A: Yes, this calculator doesn't include fees, insurance, or potential rate changes for variable loans.

Q5: How accurate is this calculator?
A: It provides a good estimate for fixed-rate loans. For variable rates, consult your lender as rates may change.