1. What is the Loan Payment Formula?

The loan payment formula calculates the fixed monthly payment required to repay a loan over a specified term, including both principal and interest components. This is the standard formula used for Westpac home loans.

2. How Does the Calculator Work?

The calculator uses the loan payment formula:

Where:

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

Explanation: The formula accounts for the compounding effect of interest over the life of the loan, ensuring each payment covers both interest and principal reduction.

3. Importance of Loan Payment Calculation

Details: Accurate payment calculation helps borrowers understand their financial commitments, compare loan options, and budget effectively for home ownership.

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: Does this include Westpac's fees and charges?
A: No, this calculates principal and interest only. Additional fees may apply to your actual loan.

Q2: How does an offset account affect payments?
A: Offset accounts reduce interest calculations but don't change the monthly payment amount (they reduce the loan term instead).

Q3: What's the difference between principal and interest loans?
A: This calculator is for principal+interest loans. Interest-only loans have lower initial payments but don't reduce the principal.

Q4: Can I calculate fortnightly or weekly payments?
A: Yes, divide the monthly payment by 2 for fortnightly or by 4.33 for weekly (but check with Westpac for exact amounts).

Q5: How accurate is this calculator?
A: It provides estimates based on standard formulas. Actual loan terms may vary based on Westpac's specific policies.