Calculate your home loan repayments, total interest, and offset account savings. Covers P&I and interest-only loans with Australian bank comparison rates.
Quick start — pick a scenario to pre-fill the calculator:
| Item | Value |
|---|
Enter loan details to see LMI estimate.
Calculate to see the principal/interest split.
Add an extra repayment or lump sum on the left, then recalculate to see years and interest saved.
Balance, cumulative interest and cumulative principal over the life of the loan (includes any extra repayments entered above).
Uses the property price, deposit, term and frequency from the calculator above — just enter two rates to compare.
| Item | Detail |
|---|---|
| Comparison rate | Includes fees and charges in the effective rate. Required by law in AU advertising. |
| LMI (Lenders Mortgage Insurance) | Required when deposit <20% (LVR >80%). Protects the lender, not the borrower. |
| Serviceability buffer | APRA requires banks to assess borrowers at rate +3% (e.g. 6.25% → tested at 9.25%) |
| Stamp duty | Varies by state — see our Stamp Duty Calculator |
| First Home Buyer grants | Up to $30,000 in some states. FHLDS (5% deposit) and shared equity schemes available. |
The RBA cash rate directly influences variable mortgage rates. As of 2026, major bank standard variable rates are approximately 6.0–6.5% p.a. Use our Interest Rate Calculator to compare fixed vs variable.
A mortgage is a loan secured against real estate — the property itself acts as collateral. In Australia, home loans are offered by banks, credit unions, and non-bank lenders, typically over terms of 20 to 30 years. Every mortgage repayment consists of two components: principal (repaying the money borrowed) and interest (the lender's fee for providing the loan).
In the early years of a mortgage, the majority of each repayment goes toward interest rather than principal. As the balance reduces, an increasing proportion of each payment reduces the principal — this is called amortisation. The calculator above shows the full amortisation schedule so you can see exactly how this balance shifts over the life of your loan.
Australian home loan interest is calculated daily and charged monthly. Your interest charge for any given month is:
Monthly interest = Loan balance × (Annual rate ÷ 365) × Days in month
This daily calculation method means that any extra repayment you make reduces the balance immediately — and therefore reduces the interest charged from that day forward. This is why even small additional payments have a compounding benefit over the life of the loan.
With the RBA cash rate at 4.35% as of June 2026 (following three increases in early 2026), standard variable rates at major banks are approximately 6.3–7.0% p.a. for owner-occupiers paying principal and interest.
| Scenario | Loan Amount | Rate | Term | Monthly Payment | Total Interest |
|---|---|---|---|---|---|
| First home buyer | $500,000 | 6.5% | 30yr | $3,160 | $637,600 |
| Upgrader purchase | $700,000 | 6.5% | 30yr | $4,424 | $892,640 |
| Investment property | $600,000 | 6.8% | 30yr | $3,912 | $808,158 |
| Paid off faster | $600,000 | 6.5% | 20yr | $4,473 | $473,625 |
Note how reducing the loan term from 30 to 20 years on a $600,000 loan at 6.5% increases monthly repayments by $681 but saves approximately $291,600 in total interest over the life of the loan.
Variable rate loans move with the lender's standard variable rate, which is influenced by (but not always equal to) RBA cash rate changes. Variable loans allow unlimited extra repayments and typically include access to an offset account.
Fixed rate loans lock in a rate for 1–5 years. They provide repayment certainty but restrict extra repayments and usually have no offset account. Breaking a fixed rate early can trigger significant break costs — always request a written break cost estimate before fixing or breaking.
Split loans divide the mortgage into fixed and variable portions — a popular choice that balances certainty with flexibility.
Every repayment on a standard P&I loan is split into two parts. The interest portion pays the lender for the use of their money, calculated daily on your outstanding balance. The principal portion reduces the amount you actually owe. Early in the loan, interest dominates each payment because the balance is highest; as the balance shrinks, more of each repayment chips away at the principal. On a $600,000 loan at 6.5% over 30 years, roughly 80% of your very first repayment is interest — by year 25, that flips to roughly 80% principal. This is precisely why extra repayments made early in a loan have the largest long-term impact: they attack the balance while interest is doing the most damage.
An offset account is an everyday transaction account linked to your home loan. Instead of earning interest on savings held in the account, the balance is used to reduce the loan balance that interest is calculated on. If you owe $600,000 and hold $40,000 in a linked offset account, you're only charged interest on $560,000 — while still being able to withdraw the $40,000 at any time, unlike a redraw. Because Australian home loan interest is calculated daily, offset savings compound in your favour every single day. A 100% offset account is one of the most effective ways to reduce total interest paid without changing your repayment amount, and most lenders only offer full offset on variable rate loans.
A redraw facility lets you access extra repayments you've made above the minimum required amount. Unlike an offset account, redraw funds sit inside the loan itself rather than in a separate transaction account — you "redraw" them back out when needed. Redraw reduces interest in exactly the same way an offset balance does, but access can be slower (some lenders charge a small redraw fee or cap the amount per transaction), and funds redrawn from a loan used to purchase an investment property can affect the tax-deductibility of the interest. Offset is generally preferred for money you expect to move in and out often; redraw suits a long-term buffer you don't intend to touch frequently.
Repayment frequency affects more than convenience — fortnightly repayments in particular can shave years off your loan. Most lenders calculate a "fortnightly" repayment as exactly half the monthly figure. Because there are 26 fortnights in a year (not 24), paying fortnightly means you make the equivalent of 13 monthly repayments annually instead of 12 — one extra full repayment every year, aimed straight at the principal.
| Frequency | Payment amount | Payments per year | Annual total |
|---|---|---|---|
| Monthly | $3,793 | 12 | $45,516 |
| Fortnightly | $1,896 | 26 | $49,296 |
| Weekly | $948 | 52 | $49,296 |
Fortnightly and weekly repayments produce the same extra annual total (roughly one additional monthly payment per year) and cut a similar amount of time and interest off the loan compared with strictly monthly repayments — the calculator above lets you compare all three instantly.
Choosing a shorter loan term increases your regular repayment but meaningfully cuts total interest, since the lender has less time to charge interest on the outstanding balance.
| Loan term | Loan amount | Rate | Monthly repayment | Total interest |
|---|---|---|---|---|
| 30 years | $600,000 | 6.5% | $3,793 | $765,480 |
| 25 years | $600,000 | 6.5% | $4,050 | $615,000 |
| 20 years | $600,000 | 6.5% | $4,473 | $473,520 |
Dropping from 30 to 25 years adds about $259/month but saves roughly $150,000 in interest over the life of the loan; dropping all the way to 20 years adds about $681/month but saves roughly $291,600 in interest over the life of the loan. If a shorter term stretches your budget too far, you can achieve a similar outcome on a 30-year loan simply by making extra repayments voluntarily — keeping the flexibility to scale back if your circumstances change.
Because most Australian mortgages are variable, even small rate movements have a real dollar impact. On a $600,000 loan over 30 years:
| Interest rate | Monthly repayment | Change from 6.0% |
|---|---|---|
| 5.50% | $3,407 | −$194 |
| 6.00% | $3,600 | — |
| 6.50% | $3,793 | +$193 |
| 7.00% | $3,993 | +$393 |
| 7.50% | $4,197 | +$597 |
This is the same logic APRA relies on when it requires lenders to test your ability to repay at a buffer well above the actual rate on offer — see the Serviceability section below.
Your Loan-to-Value Ratio (LVR) is the loan amount expressed as a percentage of the property's value: LVR = (Loan amount ÷ Property value) × 100. A $560,000 loan against a $700,000 property is an LVR of 80%. LVR matters because it's the main trigger for Lenders Mortgage Insurance and can influence the interest rate you're offered — many lenders price loans above 80% LVR slightly higher to reflect the added risk. As you pay down the loan or the property appreciates, your LVR falls, which can open the door to refinancing at a sharper rate or requesting LMI removal.
Lenders Mortgage Insurance is a one-off premium charged when your deposit is below 20% (LVR above 80%). Despite the name, LMI protects the lender if you default — not you. It's typically calculated as a percentage of the loan amount and increases sharply as LVR climbs toward 95%. LMI can usually be paid upfront or capitalised into the loan (added to the balance and repaid over the loan term, which means you also pay interest on it). The calculator above estimates your LMI automatically whenever your deposit is below 20%. Eligible first home buyers can avoid LMI entirely through the government's First Home Guarantee, even with just a 5% deposit.
Borrowing power is the maximum amount a lender will approve based on your income, expenses, debts, dependants and the interest rate buffer APRA requires (see below). Lenders typically apply a formula along the lines of: (net income − living expenses − existing debt repayments) tested at the buffer rate, then apply a maximum acceptable ratio of repayments to income. Two applicants earning the same salary can have very different borrowing power depending on credit card limits, buy-now-pay-later accounts, HECS/HELP debt and existing loan repayments — all of which reduce what a lender considers available. Use our Borrowing Power Calculator for a detailed estimate based on your full financial picture.
The Australian Prudential Regulation Authority (APRA) sets prudential standards that all authorised deposit-taking institutions must follow when assessing home loan applications. The key rule for borrowers is the serviceability buffer: lenders must assess your ability to repay at your proposed interest rate plus a buffer — currently a minimum of 3 percentage points — even though you'll actually pay the lower, unbuffered rate. On a loan priced at 6.25%, the bank tests your finances as if the rate were 9.25%. This buffer exists to ensure borrowers can still service their loan if rates rise, and it's a major reason your maximum borrowing capacity is often lower than you might expect from your income alone.
Several Commonwealth and state schemes reduce upfront costs for first home buyers:
| Scheme | Benefit |
|---|---|
| First Home Guarantee | Buy with a 5% deposit and no LMI (places limited annually, run through Housing Australia) |
| First Home Owner Grant | A one-off cash grant for new or newly built homes, amount and eligibility vary by state |
| Stamp duty concessions | Full or partial exemption in most states below set property price thresholds |
| First Home Super Saver Scheme | Voluntary super contributions can later be withdrawn to help fund a deposit |
Scheme availability, price caps and income tests change regularly and vary significantly by state — always confirm current details with Housing Australia or your state revenue office before relying on a scheme in your budgeting.
Refinancing means replacing your current home loan with a new one — either with your existing lender or a new one — typically to secure a lower rate, access equity, or consolidate debt. Refinancing costs to weigh up include discharge fees, new lender establishment fees, LMI (if your LVR is still above 80%), and break costs if you're leaving a fixed rate early. As a rule of thumb, refinancing is worth investigating if you can secure a rate at least 0.5–0.75 percentage points lower than your current rate, though a smaller gap can still be worthwhile on a large loan balance with several years remaining. Our Refinance Calculator compares your current loan against a new offer, factoring in switching costs.
Making even modest extra repayments dramatically reduces both the loan term and total interest. Here is the impact of an extra $500 per month on a $600,000 loan at 6.5% over 30 years:
| Extra monthly payment | Years saved | Interest saved | New payoff term |
|---|---|---|---|
| $0 (minimum only) | — | — | 30 years |
| $200/month extra | ~4 years | ~$122,000 | ~26 years |
| $500/month extra | ~8 years | ~$241,000 | ~22 years |
| $1,000/month extra | ~12.5 years | ~$360,000 | ~17.5 years |
A household is generally considered to be in "mortgage stress" when home loan repayments exceed 30% of gross household income — a widely used benchmark among Australian housing researchers and regulators. Being above this threshold doesn't automatically mean a household can't cope, but it does leave much less room to absorb rate rises, job loss, or unexpected expenses.
Practical ways to reduce the risk of mortgage stress:
The deposit is rarely the only cash you need at settlement. Budget for these additional costs on top of your deposit:
| Cost | Typical range |
|---|---|
| Stamp duty | $0 – $40,000+ (state and price dependent) |
| Conveyancing / legal fees | $800 – $2,500 |
| Building inspection | $300 – $600 |
| Pest inspection | $200 – $400 |
| Loan application / valuation fees | $0 – $600 |
| Title registration / transfer fees | $150 – $400 |
| LMI (if LVR >80%) | $2,000 – $35,000+ |
| Moving costs | $500 – $2,500 |
Use our Stamp Duty Calculator and Home Deposit Calculator to size these costs precisely for your state and purchase price before you set your final budget.
| Term | Meaning |
|---|---|
| Principal | The amount actually borrowed, excluding interest. |
| Comparison rate | Interest rate plus most fees, expressed as a single annual percentage for fair comparison. |
| LVR | Loan-to-Value Ratio — the loan as a percentage of the property value. |
| LMI | Lenders Mortgage Insurance — protects the lender when LVR is above 80%. |
| Offset account | A transaction account linked to the loan; its balance reduces interest charged. |
| Redraw | Access to extra repayments already made, held within the loan itself. |
| Serviceability buffer | The extra 3 percentage points APRA requires lenders to test affordability against. |
| Amortisation | The gradual reduction of a loan balance through scheduled repayments. |
| Split loan | A mortgage divided between fixed and variable portions. |
| Break cost | A fee charged for exiting a fixed rate loan early. |
Your mortgage repayment depends on far more than just the interest rate — loan term, repayment frequency, offset balance and fees all move the final number, sometimes by tens of thousands of dollars over the life of the loan. Use the calculator above to model your own scenario, then compare it against a shorter term, a higher offset balance, or extra repayments to see which lever makes the biggest difference to your situation. For a full picture before you apply, pair this calculator with our Borrowing Power and Stamp Duty calculators below, and always confirm final figures with your lender's official comparison rate quote.
Can I pay off my Australian mortgage early?
Yes. Most variable rate home loans allow unlimited extra repayments at no charge. Fixed rate loans may allow up to $10,000-$30,000 per year in extra repayments, with break costs applying if you exceed this or pay out the loan early. Always check your specific loan terms.
How much deposit do I need to buy a house in Australia?
The minimum deposit accepted by most lenders is 5%. However, deposits below 20% typically require Lenders Mortgage Insurance (LMI), which can cost $10,000-$35,000+. The First Home Guarantee allows eligible first home buyers to purchase with 5% deposit and no LMI.
What happens if interest rates increase?
On a variable rate loan, your minimum monthly repayment increases when the lender raises rates. Each 0.25% rate increase adds approximately $78/month to a $600,000 variable loan. On a fixed rate loan, your repayment is locked until the fixed term ends.
What is an offset account and how does it work?
An offset account is a transaction account linked to your home loan. The balance in your offset reduces your loan balance for daily interest calculation. $50,000 in offset on a $600,000 loan means you only pay interest on $550,000 — saving thousands in interest over the loan term.
How is fortnightly repayment better than monthly?
Paying fortnightly (half the monthly amount, 26 times per year) is equivalent to making 13 monthly payments instead of 12. This one extra payment per year reduces your principal faster, cutting several years off a typical 30-year loan and saving tens of thousands in interest.
What is LVR (Loan to Value Ratio)?
LVR is your loan amount as a percentage of the property value. A $480,000 loan on a $600,000 property has an LVR of 80%. LVR above 80% usually triggers Lenders Mortgage Insurance. Once your LVR drops below 80% through repayments or property value growth, you may be able to request LMI removal with some lenders.
What is a comparison rate on a home loan?
A comparison rate combines the interest rate with most fees and charges into a single percentage that represents the true annual cost. Australian lenders are legally required to display comparison rates. The difference between the headline rate and comparison rate reveals the fee load — always compare comparison rates.
Can I use a mortgage calculator for investment properties?
Yes, the same repayment formulas apply. However, investment property analysis should also consider rental yield, negative gearing tax benefits, depreciation, and ongoing expenses — use our Rental Property Calculator for a full investment property analysis.
How much does stamp duty add to buying costs in Australia?
Stamp duty (transfer duty) is a state government tax that varies significantly. On a $700,000 property: approximately $24,713 in NSW for non-first-home buyers, $36,330 in Victoria, $13,433 in Queensland. First home buyers may pay $0 in NSW (under $800k) or VIC (under $600k). Use our Stamp Duty Calculator for an exact figure by state.
What is the maximum home loan term in Australia?
Most Australian lenders offer home loan terms of up to 30 years. Some specialist lenders offer 35-year terms. Longer terms reduce monthly repayments but significantly increase total interest paid. A 35-year loan versus 30-year on $600,000 at 6.5% saves $120/month but costs approximately $130,000 more in total interest.
What exactly is a mortgage?
A mortgage is a loan used to buy property, secured against that property as collateral. If repayments aren't made, the lender can ultimately repossess and sell the property to recover the debt. In Australia the terms "mortgage" and "home loan" are used interchangeably.
How are mortgage repayments calculated?
Repayments are calculated from the loan amount, interest rate and loan term using a standard amortisation formula, which spreads principal and interest across equal instalments so the loan is fully repaid by the end of the term. Our calculator applies this formula automatically based on your inputs.
How much can I borrow for a home loan?
Borrowing power depends on income, living expenses, existing debts, dependants and the interest rate buffer lenders must apply under APRA rules. As a rough guide, lenders often allow total debt repayments up to around 30–35% of gross income, but this varies significantly by lender. Use our Borrowing Power Calculator for a personalised estimate.
Should I choose a fixed or variable rate loan?
Variable loans offer flexibility — unlimited extra repayments, offset accounts, and rates that fall if the RBA cuts — but repayments can rise. Fixed loans lock in certainty for 1–5 years but restrict extra repayments and usually exclude offset. Many borrowers split the loan between both to balance the trade-off.
Offset vs redraw — which is better?
Both reduce interest the same way, but offset funds sit in a separate, instantly accessible transaction account, while redraw funds sit inside the loan and can be slower to access or subject to a fee. Offset is generally preferred for money you move often; redraw suits a rarely-touched buffer, though redrawing on an investment loan can affect interest deductibility.
What is Lenders Mortgage Insurance (LMI)?
LMI is a one-off insurance premium charged when your deposit is below 20% (LVR above 80%). It protects the lender, not you, and can cost from a few thousand dollars up to tens of thousands depending on your LVR and loan size. It can typically be paid upfront or added to the loan balance.
Can extra repayments really save that much money?
Yes. Because interest is calculated daily on the outstanding balance, every extra dollar paid off early stops accruing interest immediately. An extra $500/month on a $600,000 loan at 6.5% can save roughly $163,000 in interest and cut about 7 years off a 30-year term.
When should I consider refinancing?
Refinancing is worth investigating when a new lender offers a rate meaningfully lower than your current one (typically 0.5% or more), when you want to access equity, or when you want features like offset that your current loan lacks. Weigh any discharge, establishment or break costs against the projected savings first.
How does APRA's serviceability buffer affect what I can borrow?
APRA requires lenders to assess your ability to repay at your loan rate plus a minimum 3 percentage point buffer. This lowers most borrowers' maximum loan size compared with a test at the actual rate, and is designed to ensure you could still afford repayments if rates rose.
What is a split home loan?
A split loan divides your mortgage into a fixed portion and a variable portion, each with its own rate. It lets you lock in certainty on part of the loan while retaining flexibility (offset, unlimited extra repayments) on the rest.
How do banks assess loan serviceability?
Lenders review gross income, verified living expenses (often benchmarked against the Household Expenditure Measure), existing debts and credit limits, dependants, and then apply the APRA serviceability buffer to your proposed rate to confirm you could service the loan under stress.
How do first home buyer schemes actually work?
Schemes like the First Home Guarantee let eligible buyers purchase with as little as 5% deposit without paying LMI, since the government guarantees the gap. State grants and stamp duty concessions further reduce upfront costs. Eligibility depends on income caps, property price caps and whether you've owned property before.
What's the difference between interest-only and P&I repayments?
Interest-only repayments cover just the interest charged each period, leaving the principal balance unchanged — common for a fixed period on investment loans. Principal and Interest (P&I) repayments reduce the balance over time and are the default for most owner-occupier loans.
Can I get a home loan if I'm self-employed?
Yes, though lenders typically require two years of tax returns and notices of assessment to verify income, rather than the payslips used for PAYG employees. Some lenders offer "low-doc" loans for self-employed borrowers, usually at a slightly higher rate.
Do I need a mortgage broker or can I go direct to a bank?
Both are valid paths. A mortgage broker compares multiple lenders on your behalf at no direct cost to you (they're paid commission by the lender) and can be useful if your situation is complex. Going direct to a bank can suit borrowers who already have a preferred lender or existing relationship.
What settlement costs should I budget for beyond the deposit?
Beyond stamp duty, budget for conveyancing/legal fees, loan application and valuation fees, building and pest inspections, LMI if applicable, and moving costs. Together these typically add several thousand dollars on top of the deposit.
How long is a home loan pre-approval valid for?
Pre-approval is typically valid for 90 days, though this varies by lender. It gives an indication of your borrowing capacity but isn't a guarantee — final approval still requires a full assessment once you've found a property and the loan goes to formal application.
Does a rate cut automatically lower my repayments?
On a variable loan, most lenders automatically reduce your minimum repayment when they cut rates — though some borrowers choose to keep repayments the same to pay the loan off faster. On a fixed loan, a rate cut has no effect until the fixed term ends.
Can I have more than one offset account?
Many lenders allow multiple offset accounts linked to a single loan, useful for separating savings, bills and everyday spending while still offsetting the full combined balance against your mortgage. Check with your lender, as some cap the number or charge a fee per additional account.
What is considered mortgage stress in Australia?
A household is generally considered in mortgage stress when repayments exceed 30% of gross household income. This is a guide rather than a hard rule — your genuine comfort level also depends on other expenses, income stability and any emergency fund you hold.
What extra costs should I budget for when buying a home?
Beyond the deposit, budget for stamp duty, conveyancing, building and pest inspections, loan and valuation fees, title registration, LMI if your deposit is under 20%, and moving costs. These can add anywhere from a few thousand to tens of thousands of dollars depending on your state and purchase price.