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 is the standard calculation used by Australian banks for principal and interest home loans.

2. How Does the Calculator Work?

The calculator uses the PMT formula:

Where:

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

Explanation: The formula calculates the fixed payment needed to pay off a loan with interest over a set period, accounting for compound interest.

3. Importance of Loan Repayment Calculation

Details: Understanding your monthly repayments helps with budgeting and comparing different loan options. It's essential for financial planning when purchasing property in Australia.

4. Using the Calculator

Tips: Enter the loan amount in AUD, the annual interest rate (e.g., 6.24 for 6.24% p.a.), and the loan term in years. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What is a typical interest rate in Australia?
A: As of 2024, standard variable rates range from about 6% to 7% p.a., but this varies by lender and loan type.

Q2: Does this include other loan costs?
A: No, this calculates principal and interest only. It doesn't include fees, LMI, or other loan costs.

Q3: How does an offset account affect repayments?
A: An offset account reduces interest but doesn't change the repayment amount unless you request it.

Q4: What if I make extra repayments?
A: Extra repayments reduce the principal faster and may shorten your loan term.

Q5: Is this calculator accurate for all loan types?
A: It works for standard principal and interest loans. Interest-only loans or loans with special features may require different calculations.