What this calculator does
It estimates the regular repayment that would clear a loan of a given size, at a given interest rate, over a given term, paid weekly, fortnightly or monthly. From the same schedule it shows total interest, total repaid and when the loan would be cleared, and how all of that moves if you add an extra repayment or the rate changes.
It can also hold two scenarios side by side, and it can work backwards from the repayment you would be comfortable paying to a rough price ceiling. Every figure is arithmetic on the numbers you type. The rate in the starting figures is an illustration and not today’s market rate; use the rate your lender has quoted or the one you want to test.
How the calculation works
The calculator uses the standard level-payment (annuity) method, one period at a time. The rate for each period is the annual rate divided by the number of periods in a year: 52 for weekly, 26 for fortnightly, 12 for monthly. The number of repayments is the term in years times the same figure.
The regular repayment is the amount that, paid every period at that rate, brings the balance to exactly zero after the last repayment. Each period, interest is the opening balance times the period rate; the rest of the repayment reduces the balance. Interest and repayments are rounded to the nearest cent, and the final repayment is whatever clears the last few cents.
This is a periodic approximation, not a dated daily schedule. Many lenders work out interest daily and charge it on set dates, and the two methods can differ by small amounts over a long loan. The offset calculator on this site uses a day-by-day model for that reason: an offset depends on daily balances and cannot be approximated one period at a time.
A worked example
Borrow $500,000 at 6% a year over 30 years, paid monthly. The rate per month is 0.5%, there are 360 repayments, and the repayment is $2,997.75 a month. Over the full term that is $1,079,193 repaid, of which $579,193 is interest.
Add $200 a month and, with the same rate and the same scheduled repayment, the loan is cleared in 25 years 6 months instead of 30 years, and $103,145 less interest is paid.
Early repayments are mostly interest, so you still owe more than half the loan for longer than half the term. In this example the balance first falls to half the starting loan or less after 21 years, not after 15 years.
Extra repayments
An extra repayment goes straight to the balance, so the interest charged on every later period is a little lower. Held against the same rate and the same scheduled repayment, extra repayments can shorten the loan and cut total interest; they cannot increase interest. The earlier in the loan they are made, the more they save.
Fixed-rate loans may restrict extra repayments or charge for them, and rules differ between lenders and products. Check your loan terms before planning around an extra repayment.
Paying half the monthly amount every fortnight is not the same as paying the monthly amount. There are 26 fortnights in a year, so 26 half-payments add up to 13 monthly payments, not 12. The calculator shows that difference in the annual outlay line when you compare frequencies.
When the rate changes
The rate-change table shows two different things, and they should not be confused. “Repayment recalculated” asks what the repayment would need to be to still clear the loan on schedule at the new rate. “If you kept paying today’s amount” asks how long the loan would take if the repayment stayed where it is.
On the example loan, one percentage point more recalculates the repayment to $3,326.51 a month. Keeping the original $2,997.75 instead stretches the payoff to 51 years 9 months.
If the repayment you keep paying does not cover the interest being charged, the balance never falls. The calculator then says so, rather than showing a payoff date. On the example loan, two points more raises the monthly interest to about $3,333, which is more than the $2,997.75 repayment.
Comparing two scenarios
Add scenario B to test one change against your starting point: a different rate, a shorter term, an extra repayment, a smaller loan, or a different frequency. B starts as a copy of A, the page lists exactly which inputs differ, and the comparison shows repayment, annual outlay, total interest, total repaid and payoff time side by side.
Scenario B is a what-if, not a bank quote. When the two scenarios use different frequencies the repayment per period is not directly comparable, so compare the annual outlay line instead.
A price ceiling from a repayment budget
The optional price-ceiling section runs the repayment formula backwards. From the cash you have, your estimated buying costs, the most you would put toward repayments each period, and the rate and term above, it works out the loan that repayment would clear and adds the deposit left after costs. A second line repeats it at a higher rate.
This is not a borrowing-capacity assessment. A lender looks at income, existing debts, living costs, its own stress tests and its lending policy, and none of that is modelled here. Treat the result as a way to see how a repayment budget, a rate and a deposit interact, and not as the price you could buy at or the amount a lender would lend.
Why your bank’s figure may differ
- Interest method. Lenders may accrue interest daily and charge it on set dates; this calculator charges one period’s interest at a time.
- Payment timing. The date of your first repayment, and the day each one is taken, change how much interest builds up.
- Rate changes. A fixed rate ends; a floating rate can move at any time. This calculator holds one rate for the whole loan unless you test another.
- Rounding. Lenders round at different steps, so a repayment can differ by a few cents.
- Fees and loan structure. Establishment fees, split loans with different rates and terms, and offset or revolving facilities are not modelled here.
Common misunderstandings
- The repayment shown is not guaranteed for the life of the loan. It is the repayment at the rate you entered.
- Total interest is a projection on one assumed rate. It is not a prediction of what you will pay.
- A longer term lowers each repayment but raises total interest, because interest is charged on the balance for longer.
- Weekly and fortnightly repayments are not simply the monthly figure divided up; they change how many payments are made each year.