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Loan Repayment Formula:
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The home loan repayment formula calculates the fixed monthly payment required to fully repay a loan over its term, including both principal and interest components. This is the standard calculation used by most Australian mortgage lenders.
The calculator uses the standard loan repayment formula:
Where:
Explanation: The formula accounts for compound interest over the life of the loan, calculating a fixed payment that will pay off both principal and interest by the end of the term.
Details: Understanding your monthly repayment helps with budgeting and financial planning. It also allows you to compare different loan options and terms to find the most suitable mortgage for your situation.
Tips: Enter the principal amount in AUD, the annual interest rate as a percentage (e.g., 5.25), and the loan term in years. The calculator will show your estimated monthly payment, total repayment amount, and total interest paid over the life of the loan.
Q1: Does this include other home loan fees?
A: No, this calculates only the principal and interest components. Additional costs like establishment fees, LMI, or ongoing fees are not included.
Q2: How does an offset account affect repayments?
A: An offset account reduces the interest calculated but doesn't change the monthly payment amount unless you specifically request repayment recalculation.
Q3: What's the difference between principal and interest vs interest-only?
A: This calculator is for principal and interest loans where each payment reduces your loan balance. Interest-only loans have lower initial payments but don't reduce the principal.
Q4: How often are repayments typically made?
A: While this calculator shows monthly payments, many Australian lenders allow fortnightly or weekly payment options which can reduce total interest.
Q5: Can I change my repayment amount later?
A: Most lenders allow you to increase repayments, but decreasing them usually requires refinancing or demonstrating financial hardship.