Mortgage Repayment Calculator 2025 (Australia)

How this mortgage model works

This tool estimates repayments and interest using standard amortisation. It supports weekly/fortnightly/monthly schedules, ongoing extra repayments, an average offset balance, interest-only (IO) periods, one-off lump sums, and multiple rate changes. At each rate step, we re‑amortise the remaining principal over the remaining term at the new rate.

Quick start

1. Enter loan amount, rate, term, and frequency.
2. Optionally add an offset balance, extra repayment, and any interest-only years.
3. Add lump sums (e.g., bonus at year 3; inheritance at year 8).
4. Use Rate changes to add steps (e.g., after 2 years → 7.10%).
5. Tick Compare with no extra repayments to see interest/time saved.

What each control does

• Frequency: converts the annual rate into 12/26/52 periods and spreads payments accordingly.
• Offset balance: interest is charged on max(0, balance − offset) each period; principal is unchanged.
• Interest‑only years: minimum equals interest; any “extra per period” still reduces principal. After IO ends, the remaining term is used to amortise.
• Extra per period: added to the minimum; 100% goes to principal reduction.
• Lump sums: applied at the nearest repayment period to the chosen year; 100% to principal.
• Rate changes: at each step we recompute the minimum repayment for the remaining P&I periods using the then‑current principal and new rate.

Behind the math (step by step)

1. Convert % p.a. to per‑period rate: r = annualRate / periodsPerYear.
2. Compute minimum P&I: M = P · r / (1 − (1 + r)−n).
3. During IO, minimum = interest; extras still reduce principal.
4. Each period: interest = max(0, balance − offset) · r; principal paid = max(0, payment − interest).
5. Apply any lump sum that period to principal after interest, then update balance.
6. At rate steps, re‑compute M for the remaining P&I periods at the new rate using the current balance.

Interpreting the outputs

• Minimum repayment: the current P&I payment based on the latest rate and remaining term (IO periods excluded).
• Total interest: cumulative interest paid under the selected scenario.
• Estimated payoff time: periods until balance reaches zero (with your extras, lumps, and steps).
• Comparison block: interest and time saved relative to a baseline with no extras or lump sums (but same offset/IO/steps).

Worked examples

• Extra repayments: $600 k @ 6.25% for 30 years, monthly. Extra $200/month can shave years off and save significant interest; the comparison block quantifies it.
• Rate steps + offset: Start 6.20%, after 2 y → 7.00%, after 5 y → 5.80%, with an average $30 k offset. You’ll see the repayment bump at year 2, relief at year 5, and lower interest due to the offset across all periods.

Limitations & assumptions

• Interest is accrued per period (banks accrue daily; this is a clear, close approximation).
• No fees, LMI, or redraw restrictions are modelled.
• Offset is treated as an average per‑period balance; real balances fluctuate.
• We assume payments occur on a regular schedule with immediate credit to principal.

Glossary

• Amortisation: paying off the loan with regular payments that cover interest and principal.
• Interest‑only (IO): payments cover interest only; principal is unchanged unless you add extras/lumps.
• Offset account: a bank account whose balance reduces the interest‑bearing principal.

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FAQs

• Does an offset reduce my repayment or just the interest? It reduces the interest charged each period; the minimum repayment only changes when we re‑amortise (at a rate step) or after IO ends.
• Is it better to pay fortnightly than monthly? With the same nominal rate, fortnightly/weekly increases payment count per year and can reduce interest slightly due to timing.
• How do interest‑only years affect the loan? During IO you pay interest only; any extra goes 100% to principal. After IO, the remaining term is used to amortise.
• What happens at each rate step? We recompute the minimum P&I based on current balance, new rate, and remaining periods.
• Where do lump sums apply? At the nearest repayment period to your chosen year; 100% to principal.
• Why doesn’t my schedule match my bank’s to the cent? Banks accrue daily and round differently; this is a per‑period model for clarity.
• Does the calculator include fees or redraw restrictions? No—kept deliberately simple.
• Can I switch repayment frequency mid‑loan? Not directly; simulate with segments via rate steps.
• Will extra repayments always shorten the term? Yes—unless offset/IO interactions make the optimal path identical.
• Can the balance go negative with a big offset? No—the offset only reduces the interest base, not the principal itself.

Disclaimer: This tool provides general information only and does not account for your personal objectives, financial situation or needs. Interest is simplified to per‑period accrual; actual lender methods vary. Consider professional advice. See our full disclaimer.