1. What is the Home Loan Repayment Formula?

The home loan repayment formula calculates the fixed monthly payment required to repay a loan over a specified term. This standard formula is used by AMP and other lenders to determine regular repayments.

2. How Does the Calculator Work?

The calculator uses the PMT formula:

Where:

• \( P \) — Principal loan amount (AUD)
• \( r \) — Monthly interest rate (annual rate ÷ 12)
• \( n \) — Total number of payments (term in years × 12)
• \( PMT \) — Monthly payment amount (AUD)

Explanation: The formula accounts for compound interest over the life of the loan, calculating a fixed payment that covers both principal and interest.

3. Importance of Loan Repayment Calculation

Details: Understanding your potential repayments helps with budgeting, loan comparison, and determining how much you can afford to borrow.

4. Using the Calculator

Tips: Enter the loan amount in AUD, the annual interest rate (AMP's current standard variable rate is 6.59% p.a.), and the loan term in years.

5. Frequently Asked Questions (FAQ)

Q1: Does this include other loan costs?
A: No, this calculates principal and interest only. It doesn't include fees, LMI, or other loan costs.

Q2: How accurate is this calculator?
A: It provides standard repayment estimates. Actual repayments may vary based on specific loan terms.

Q3: What's AMP's current interest rate?
A: As of 2024, AMP's standard variable rate is approximately 6.59% p.a., but rates vary by product and customer.

Q4: Can I calculate fortnightly payments?
A: For fortnightly payments, divide the monthly amount by 2 (though some lenders calculate differently).

Q5: How does extra repayment affect my loan?
A: Extra repayments reduce the principal faster, potentially saving interest and shortening the loan term.