Home Loan Repayment Calculator Commbank Canada

Loan Repayment Formula:

\[ PMT = P \times \frac{r \times (1 + r)^n}{(1 + r)^n - 1} \]

Monthly Payment (PMT):

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1. What is the Home Loan Repayment Formula?

The home loan repayment formula calculates the fixed monthly payment required to fully repay a loan over its term. This is the standard calculation used by most financial institutions including CommBank Canada for their home loans.

2. How Does the Calculator Work?

The calculator uses the standard loan payment formula:

\[ PMT = P \times \frac{r \times (1 + r)^n}{(1 + r)^n - 1} \]

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 payment amount (AUD)

Explanation: The formula accounts for both principal and interest payments over the life of the loan, with payments remaining constant while the proportion going to principal vs. interest changes over time.

3. Importance of Loan Repayment Calculation

Details: Understanding your monthly repayment helps with budgeting and financial planning. It allows you to compare different loan options and determine what you can afford.

4. Using the Calculator

Tips: Enter the principal amount in AUD, annual interest rate as a percentage (e.g., 5.25 for 5.25%), and loan term in years. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Is this specific to CommBank Canada?
A: While this uses standard loan calculation methods, specific loan products may have additional fees or features not accounted for here.

Q2: Does this include taxes and insurance?
A: No, this calculates principal and interest only. Your actual payment may include property taxes, insurance, and other fees.

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

Q4: What's the difference between fixed and variable rates?
A: Fixed rates stay constant for a set period, while variable rates can change. This calculator assumes a fixed rate for the entire term.

Q5: Can I calculate extra payments?
A: This shows standard repayments only. Extra payments would reduce the principal faster and shorten the loan term.