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Loan Repayment Formula:
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The Home Loan Repayment Calculator estimates your monthly mortgage payments based on the principal amount, interest rate, and loan term. It uses the standard PMT formula commonly used by financial institutions including CBA (Commonwealth Bank of Australia).
The calculator uses the PMT formula:
Where:
Explanation: This formula accounts for compound interest over the life of the loan, calculating the fixed payment needed to pay off the loan in full by the end of the term.
Details: Understanding your monthly mortgage payments helps with budgeting and financial planning. It 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, annual interest rate as a percentage (e.g., 5.25%), and loan term in years. The calculator will show your estimated monthly payment, total repayment amount, and total interest paid.
Q1: Does this calculator include additional fees?
A: No, this calculates principal and interest only. It doesn't include fees, insurance, or taxes that may be part of your actual mortgage payment.
Q2: How does the interest rate affect my payments?
A: Higher interest rates increase both your monthly payment and total interest paid. Even small rate differences can significantly impact long-term costs.
Q3: What's the benefit of a shorter loan term?
A: Shorter terms mean higher monthly payments but less total interest paid over the life of the loan.
Q4: Can I use this for other types of loans?
A: Yes, this formula works for any fixed-rate amortizing loan (car loans, personal loans, etc.), though terms and rates may differ.
Q5: How accurate is this calculator?
A: It provides a close estimate, but actual payments may vary slightly due to rounding methods or specific lender policies.