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Important
These results are estimates for general informational purposes only. They are not a loan approval, a formal quote, or an offer of credit, and they are subject to individual lender assessment, verification of your income, expenses and credit history, and current lender policy. This is not personal financial or credit advice and does not take your objectives or circumstances into account.
Interest rates and comparison rates vary by lender, loan purpose, LVR and your individual circumstances, and can change at any time. Any rate used here is the figure you entered, not a rate offer.
Repayments exclude establishment, ongoing and discharge fees, lenders mortgage insurance, offset benefits and any rate changes over the life of the loan. Actual repayments are set by your lender.
A principal and interest repayment is a level annuity: P = L × r ÷ (1 − (1 + r)^−n), where L is the loan amount, r is the periodic interest rate and n is the number of repayments.
Early repayments are mostly interest. On a $600,000 loan at 6.09%, the first month's repayment of about $3,634 includes roughly $3,045 of interest and only $589 of principal - the ratio flips around year 19.
During an interest only period you pay L × r each month and the balance never falls. When the period ends, the remaining principal must be repaid over the shortened remaining term, so repayments step up sharply.
A five-year interest only period on a 30-year loan means repaying the full balance over 25 years, typically lifting the repayment by 20-25% at the switch-over point.
Paying half the monthly amount every fortnight results in 26 half-payments - the equivalent of 13 monthly repayments a year instead of 12.
On a typical 30-year loan that one extra payment a year can cut around four to five years off the term and save tens of thousands in interest, with no change to the interest rate.
Every dollar in a 100% offset account reduces the balance interest is charged on, and unlike extra repayments it stays accessible. $30,000 offset against a 6.09% loan saves about $1,827 of interest a year.
Extra repayments work hardest early in the loan, because the saved interest compounds over the remaining term.
Owner-occupier, principal and interest, monthly repayments.
Switching to fortnightly repayments of $1,817 pays the loan out years earlier without any change to your budget in real terms.
$700,000 investment loan at 6.44%, five years interest only, then 25 years principal and interest.
Interest only improves cash flow now, but budget for the step up before the period ends rather than after.
Fortnightly at half the monthly amount is usually the winner, because 26 fortnights equals 13 monthly repayments a year. If your lender simply divides the monthly figure across the year, the benefit disappears - check how the repayment is calculated.
It suits investors managing cash flow or borrowers with a short-term income dip. It costs more over the life of the loan and lenders assess interest only applications on the shorter remaining P&I term, which reduces borrowing capacity.
Both save the same interest. An offset keeps the money available and, for investors, preserves the deductibility of the loan interest - redrawing extra repayments can change the tax treatment.
On a $600,000 loan over 30 years, a 1% increase adds roughly $380 a month. Running the calculator at your rate plus 1-2% is a quick way to stress-test your own budget.
Yes - a 25-year term instead of 30 on $600,000 at 6.09% raises the repayment by about $270 a month but saves well over $130,000 in interest.
Every lender reads these numbers differently. Book a free 30-minute call and we'll check your figures against real lender policy.
A free, no-obligation 30-minute call is usually enough to know exactly where you stand and what to do next.
