A mortgage repayment uses the loan principal, the annual interest rate divided by 12 (monthly), and the number of repayment periods. For P&I loans, the formula ensures each payment covers the month's interest plus reduces the principal so the loan reaches zero by the end of the term. Interest-only repayments are simpler — just the monthly interest on the outstanding balance.
P&I (Principal & Interest) repayments reduce your loan balance each month. Interest-only repayments only cover the interest — your principal stays the same until the interest-only period ends (usually 1–5 years for investment loans). IO repayments are lower but you end up paying significantly more interest over the life of the loan.
Yes — fortnightly payments of half the monthly amount result in 26 half-payments per year, equivalent to 13 monthly payments instead of 12. This extra payment each year can save thousands in interest and shave years off your loan term with no extra effort.
No — this calculator shows the principal and interest component only. Lenders may also charge ongoing fees (monthly account-keeping fees, annual package fees) that increase the true cost. Your broker will factor these in when comparing loan options for you.
For variable rate loans, your repayment adjusts whenever your lender changes the rate. Simply re-enter the new rate into the calculator to see the updated repayment — or use our Refinance Savings Calculator to see how much switching lenders could save you. For fixed rate loans, your repayment stays the same for the fixed period regardless of RBA movements.