How we calculate mortgage repayments

The calculator estimates your loan using the amounts, rates and repayment type you enter. It is a planning tool, not a lender statement or a promise of an exact repayment date.

Loan term and time to repay

The term starts in your selected calculation month. For an existing loan, use the remaining years rather than the original term. We report the estimated repayment duration in years and months, rounded up to a whole month, with the number of monthly repayments and approximate month/year context underneath. The repayment count includes actual monthly payments greater than zero. Weekly extras and lump-sum contributions are separate; zero-payment months are not counted. A loan cleared by an extra contribution before the next monthly due date can have fewer monthly repayments than its rounded repayment duration in months. Daily modelling helps calculate interest but does not make an exact-day forecast reliable. If a lump-sum repayment clears the loan at commencement, the report shows $0 ongoing monthly repayment and budgeting equivalents, and Save setup stores $0 as the starting mortgage budget amount. No rate/contribution preview is shown for that cleared loan. Budget handoffs do not carry repayments or mortgage-linked contributions after actual loan closure; a fully offset loan remains open until repaid. The report leads with your starting payment and shows the next entered rate or repayment-type transition directly below the monthly amount, before weekly and fortnightly budgeting equivalents, including when it occurs and the monthly difference. Interest-only payments are first-month estimates and vary over time; the complete phase table remains available below the graph.

Principal and interest

Interest accrues daily at the entered annual rate divided by 365, including leap years, on the larger of zero and the principal minus the current offset balance. Regular repayments are monthly. The scheduled amount uses the actual calendar intervals to repay the gross outstanding loan over its remaining monthly dates at the current rate, without assuming offset savings or extra payments. It is rounded up to cents and the last payment is capped at what is due.

Interest only, then principal and interest

This calculator models no principal repayments during the selected initial interest-only period. Monthly payments settle accrued interest and vary with days, rates and offset. Direct weekly loan repayments entered for earlier years start after interest-only ends; skipped amounts are not accumulated. Lump-sum repayments entered for earlier years are deferred once to the day after the final interest-only payment. Offset deposits are savings, not principal repayments, so they may start during interest-only and reduce the interest due while principal stays flat. The inputs show the destination and first permitted contribution year. Older saved regular loan repayments retain their direct-loan destination. Once interest-only ends, scheduled principal and interest repayments use the outstanding principal and remaining original term. This is the calculator's chosen scenario assumption; actual lenders may allow voluntary principal repayments during an interest-only period.

You can set different rates before and after this change using Add a rate change. The calculator does not infer an interest-only premium or a lender’s product eligibility rules. Read Moneysmart’s interest-only explanation and Macquarie’s repayment calculation guide.

Rate changes

Interest-only loans show rates in two stages: During interest-only and After interest-only. Five full interest-only years means principal and interest starts in loan month 61, at the start of year 6. The last interest-only rate always ends with the selected interest-only period; an earlier fixed/variable rate change does not end interest-only. Fixed or variable describes the interest rate, while interest-only or principal and interest describes what you repay. Existing rates that span the switch are shown in both stages at their entered value so you can review and change each stage separately. Extra rate changes can be entered within either stage.

Each entered rate remains constant for its selected period, whether fixed or variable. At a rate change, or the end of interest-only payments, principal-and-interest repayments reset using the outstanding balance and remaining term. The anniversary payment closes the old period; the repayment-change table shows the first loan month of the new payment. Future variable rates are assumptions, not forecasts.

Offset and extra repayments

Loan repaid while keeping your offset means repayments clear the debt without spending the offset cash. Could clear the loan using your offset is the earlier point when that cash could pay out the remaining debt. Choosing that earlier payout would use the cash; the calculator does not make that choice for you. Offset cash retained includes your starting offset plus any deposits, not investment earnings.

The starting offset is cash already in your account. Weekly amounts default to deposits into that offset, building its balance every seven days from the calculation start, on or after the chosen loan year. We assume these are net savings after mortgage payments and living costs, with no withdrawals. They reduce interest but do not directly repay principal and are excluded from Total loan repayments. Offset cash can exceed the loan without creating negative interest. Alternatively, choose Loan repayments to pay the weekly amount directly to principal after any interest-only period. Lump-sum repayments occur at the start of the selected year, deferred just past the IO switch where applicable. Interest accrues before that day's deposits or payments; monthly repayments occur before extras. Deposits stop being projected after the loan is repaid, and the offset balance remains your cash.

Offset savings compare the baseline with the same loan and your offset balance, without any extra repayments. Savings from weekly deposits or additional repayments measure the further reduction from adding your weekly offset deposits or direct loan payments, according to the selected destination, while keeping your starting offset. Lump-sum contribution savings then measure the further reduction from adding your lump-sum repayments while keeping both your offset and weekly payments. All comparisons apply the same timing rules, including deferring direct principal contributions until after any interest-only period and allowing offset savings during IO. Fixed-rate products may restrict offsets or extra payments and charge break costs; these rules are not included.

Baseline, time saved and interest saved

The baseline keeps your loan amount, term, calculation start, rate changes, repayment type and interest-only period, but removes the offset, weekly extras and lump-sum repayments. Interest saved is baseline total interest minus your loan’s total interest. Time saved is the difference between their estimated repayment durations, shown in years and months. We compare calculated durations rather than assuming the baseline always ends on the last month of the selected term. A negative difference is shown as additional interest or time rather than a saving.

The headline shows total interest saved. When an offset is entered, the breakdown shows savings from the offset balance first, then the further savings from regular contributions on top of that offset, followed by a separate row for lump-sum contributions when entered. The lump-sum saving is measured with both offset and regular contributions already included. These amounts add up to the total; do not add the breakdown to the total again. Displayed whole-dollar components are rounded consistently with the displayed total. With no offset, only the total is shown. The graph’s extra-repayments-only alternative has no offset and is a separate comparison; it is not used for the contribution amount in this breakdown. Repayments are recalculated at your entered rate changes and interest-only expiry; earlier extra payments may reduce later monthly repayments rather than always shortening the term. These comparisons are calculated on your device and are not submitted as additional research scenarios.

Weekly and fortnightly figures

Weekly is monthly × 12 ÷ 52 and fortnightly is monthly × 12 ÷ 26. These are budgeting equivalents, not independently simulated repayment frequencies. For interest-only loans they use the first monthly estimate, while actual monthly interest changes.

Annual graph and table

Loan years are anniversaries from your calculation start, not calendar years. The graph has a starting point and one point at the end of every loan year through the full term, with zero balances after the loan is repaid. The blue dashed baseline has no offset or extra repayments. When both are entered, a purple dash-dot line shows your offset without any weekly or lump-sum contributions. When regular and lump-sum contributions are both entered, a teal short-dashed line also shows your offset with regular contributions, without lump-sum repayments. These are the same comparison stages used for the savings breakdown: baseline, offset only, offset plus regular contributions, then Your scenario including lump-sum contributions. Extra repayments only pays the entered additional loan contributions, while Starting offset only excludes them and retains the starting offset as cash. Those paths therefore pay different amounts into the loan. The graph does not subtract retained offset cash from principal. A gap between balance curves at one year is not lifetime interest saved; lifetime savings compare the total interest across those complete scenarios. An orange dotted line removes the starting offset while keeping the regular contribution destination and lump-sum loan payments. With weekly offset deposits, this alternative still builds offset cash from zero. These alternatives are included in the legend, tooltips and year-selector balances. Without extra repayments, Your scenario already represents the offset-only scenario and the baseline represents the no-offset scenario, so duplicate lines are omitted. Without a starting offset, Your scenario already represents the same-contributions-with-no-starting-offset alternative. For interest-only loans, the table separates Scheduled principal from Extra principal. Both scheduled and extra principal stay at zero throughout the interest-only period, so all gross loan-balance curves remain flat even if offset cash is growing. Offset cash is shown separately in the annual table and year inspector. A lump-sum repayment entered for the start of year 6 after five interest-only years occurs just after the closing interest-only payment and is included in year 6. The table ends with your year the loan is repaid, keeping that year’s payments and interest but omitting later empty years. Payments falling exactly on an anniversary are included in the year ending then. Annual amounts are displayed as whole dollars, so adding rounded rows can differ slightly from the total. The total row and result summary both use the same unrounded calculation. Interest can be zero while principal is still being repaid if the offset covers the remaining loan. The selector is labelled Inspect loan status at year X and resets to year 1 after every calculation. Hovering changes the chart tooltip without changing your selected status year. Drag its handle, use the Previous/Next year buttons, or use the arrow keys while the slider is focused to compare balances without hovering on the graph.

Testing changes to your loan

Test a different amount or rate compares one change with your current completed scenario. You can increase or reduce the total weekly offset deposit or additional loan repayment, change the starting offset balance, or change one interest rate. Other entered amounts, the term, repayment type, contribution timing and lump-sum repayments stay unchanged. A rate test recalculates the scheduled monthly payment; it does not hold that dollar payment fixed.

For an interest-rate change, select the repayment stage and rate period you want to test. For interest-only loans, the first variable period after interest-only is selected where available; changing it leaves the earlier interest-only rates unchanged. Other rate periods keep their entered rates. The preview shows the monthly repayment estimate at the start of that period; it shows when the loan is repaid before the period begins. For changes to the weekly amount or starting offset, the monthly estimate is from the calculation start. Scheduled repayments are recalculated by the same model, and interest-only payments still vary with days, balance and offset cash. With offset cash or extra contributions, a higher rate can produce a higher scheduled payment and an earlier projected payoff. This is a comparison with recalculated payments, so assess the payment and interest change together with the duration. The preview explains this when a rate increase brings repayment or offset coverage forward. Weekly amounts are separate from scheduled monthly repayments. Weekly tests lead with their monthly contribution difference; rate tests lead with the scheduled repayment difference. Starting-offset tests lead with the interest effect.

Impact of this change compares the tested scenario with your current scenario, rather than the main report’s baseline without an offset or extras. Each numerical change is the tested value minus the current value: + means higher or later; − means lower or sooner. Zero means no change. The figures underneath show the tested and current totals or durations. Monetary differences match those displayed figures, using cents for monthly repayments and whole dollars for total interest. Could clear the loan using your offset is the estimated point when offset cash could pay out the remaining principal and accrued interest. For example, $100,000 in offset could repay a remaining debt of $100,000. This is a cash milestone, separate from actual loan repayment: cash is not automatically withdrawn and principal remains outstanding until repaid. If only one scenario reaches this point, the preview describes that change without assigning a numerical time difference.

Use this scenario explicitly calculates the full report using the tested input. There is no second Calculate step. Like Calculate repayments, this successful completed calculation follows your calculator terms agreement and submits the entered mortgage scenario. Previewing alone stays local. Save setup remains a separate explicit action; neither preview nor adopting a scenario automatically saves your local profile. The budget link can transfer the tested scheduled repayment, starting offset and weekly contribution active in the selected loan period to the savings-buffer planner without adopting the preview. For a weekly test starting later, it uses that contribution’s start period. The planner uses your current budget and accessible savings, not projected future cash. Returning restores the original current mortgage inputs.

What is excluded

Fees, lender-specific rounding, tax deductions, LMI, stamp duty, offset withdrawals, split loans, full-term interest-only balloons and eligibility assessments are excluded. Your lender may use different interest, payment and rate-reset rules. All amounts are Australian dollars.