Mortgage Calculator

Australian Mortgage Repayment Calculator (2026)

A mortgage is the biggest financial commitment most Australians ever make — often $500,000 to well over a million dollars, paid back over 25 to 30 years. Small changes to your interest rate, loan term, or repayment amount can add up to tens of thousands of dollars over the life of the loan. This calculator shows you exactly what your monthly, fortnightly, and weekly repayments will look like, plus the total interest you will pay over the loan term.

Whether you are a first home buyer working out what you can afford, refinancing to chase a lower rate, or trying to figure out how much faster you can pay off your loan with extra repayments, this guide covers every angle — from interest rate movements and offset accounts to LMI, stamp duty, and how to save hundreds of thousands of dollars in interest over 30 years.

How mortgage repayments are calculated

Australian home loans use the standard principal and interest (P&I) amortisation formula. Every repayment is split between paying down the loan balance (principal) and paying the bank for the money you borrowed (interest). Early in the loan, most of your repayment goes to interest. As the balance shrinks, more of each repayment eats into the principal.

The formula behind the calculator is:

Where P is the loan amount, r is the periodic interest rate (annual rate ÷ 12 for monthly repayments), and n is the total number of repayments (e.g. 360 for a 30-year monthly loan). It is the same formula every Australian bank uses.

Fortnightly vs monthly repayments — the free trick to pay off years earlier

Here is a quirk most Australians do not realise: switching from monthly to fortnightly repayments (where the fortnightly amount is exactly half the monthly amount) can shave 5 to 7 years off a 30-year loan and save you tens of thousands in interest.

Why? A year has 12 months but 26 fortnights. If you pay half your monthly repayment every fortnight, you end up making the equivalent of 13 monthly payments per year instead of 12 — one extra repayment goes straight to the principal, compounding your savings.

Example: $600,000 loan at 6.20% over 30 years. Monthly repayments are ~$3,676 ($44,112/year). If you pay $1,838 fortnightly instead, you pay $47,788/year — an extra ~$3,676. Loan finishes in about 25 years instead of 30, saving roughly $140,000 in interest.

Offset accounts vs redraw vs extra repayments

There are three main ways to pay less interest on your home loan. All three effectively work by reducing the balance that interest is calculated on:

• Offset account — A separate transaction account linked to your mortgage. Every dollar in the offset reduces the loan balance that interest is charged on, but the money stays yours and accessible. Best for emergency funds, savings, or salary buffers.
• Redraw facility — Extra repayments you have made can be pulled back out if you need them. Interest saved is the same as an offset, but redraw can have withdrawal fees and tax complications if you later use the funds for investment.
• Extra repayments — Simply paying more than the minimum. Interest saving is immediate but the money is gone (unless you have redraw).

For tax purposes and flexibility, an offset account is almost always the winner — especially if you might convert your home into an investment property later. Redraw can taint the deductibility of loan interest in that scenario.

Lenders Mortgage Insurance (LMI) — when you need it and how to avoid it

If your deposit is less than 20% of the property value, most Australian lenders require you to pay Lenders Mortgage Insurance. LMI protects the bank (not you) if you default. On a $700,000 purchase with a 10% deposit, LMI can cost $20,000 to $30,000 — sometimes more.

Ways to avoid or reduce LMI:

• Save a 20% deposit — the cleanest option, but slow in today's market.
• First Home Guarantee scheme — federal government guarantees the difference so eligible first home buyers can buy with just 5% deposit and no LMI.
• Professional discounts — some lenders waive LMI for doctors, dentists, lawyers, accountants and other specific professions up to 90% LVR.
• Guarantor loans — a family member (usually parents) uses equity in their property to cover the shortfall.

See the borrowing power calculator to work out what deposit you actually need, and the stamp duty calculator for the full upfront costs.

Fixed vs variable rate: which is better in 2026?

Variable rate loans move up and down with the RBA cash rate and your lender's decisions. You get flexibility (extra repayments, offset accounts, no break fees) and benefit from any rate cuts — but you also cop the pain of rate rises.

Fixed rate loans lock in your rate for 1 to 5 years. Great for budget certainty, but usually come with restrictions: limited extra repayments, no offset (or a token one), and potentially large break costs if you need to exit or refinance early.

Many Australians split their loan — for example 60% variable with offset, 40% fixed for 2 years — to get the best of both. Use the refinance calculator to see if switching lenders is worth it.

Worked examples: real Australian loan scenarios

Example 1 — First home buyer, $650,000 loan at 6.20%

• Loan amount: $650,000 over 30 years
• Monthly repayment: ~$3,982
• Total interest over 30 years: ~$783,000
• Total repaid: ~$1,433,000
• Switch to fortnightly ($1,991): loan paid off in ~25 years, saving ~$150,000

Example 2 — Upgrader, $900,000 loan at 6.10%, with $40,000 offset

• Loan amount: $900,000 over 30 years
• Monthly repayment (no offset): ~$5,455
• With $40,000 sitting in offset: interest calculated on $860,000
• Interest saved over life of loan (assuming offset average): ~$110,000+

Example 3 — Aggressive payoff, $500,000 loan at 6.00% + $500/mo extra

• Loan amount: $500,000 over 30 years
• Minimum monthly repayment: ~$2,998
• Adding $500/month extra ($3,498/month total)
• Loan paid off in ~22 years instead of 30
• Interest saved: ~$135,000

Upfront costs beyond the deposit

The deposit is only part of what you need to buy a home. Other upfront costs typically include:

• Stamp duty — varies by state and can be $20,000 to $50,000+ on an average home. First home buyer concessions may apply. See the stamp duty calculator.
• Conveyancing/legal fees — $1,000 to $2,500
• Building and pest inspection — $400 to $800
• Loan application/settlement fees — $0 to $1,000 depending on lender
• Mortgage registration and transfer fees — $200 to $500
• LMI (if under 20% deposit) — $5,000 to $30,000+
• Moving costs, insurance, connection fees — $2,000 to $5,000

How much can you actually afford to borrow?

Banks assess borrowing power based on your income, existing debts, dependants, living expenses, and a serviceability buffer — currently around 3% above the actual rate. So if you are borrowing at 6.20%, the bank tests whether you could still repay at ~9.20%.

Try the borrowing power calculator to get a realistic estimate, then use this mortgage calculator to see what those repayments would actually look like on your budget.

Frequently asked questions

What interest rate should I use in the calculator?

Use your actual quoted rate. Advertised "headline" rates are often package rates or introductory rates — always check the comparison rate, which factors in fees. As of mid-2026, typical owner-occupier variable rates are in the 5.9% to 6.5% range, with fixed rates similar or slightly lower.

Should I choose 25 or 30 years?

A shorter term means much less interest overall but higher monthly repayments. Most Australians take 30 years for budget flexibility and simply make extra repayments when they can — this gets you the best of both worlds.

Do lenders count HECS/HELP debt against my borrowing power?

Yes. Your HECS repayment reduces your net income, which reduces the amount you can borrow — sometimes by $50,000 to $100,000+. See the HECS calculator for repayment estimates.

Is interest-only (IO) worth it?

Interest-only loans keep your minimum repayments low but you are not paying down principal — the debt does not shrink. IO is mainly used by investors for tax reasons, or by owner-occupiers in temporary cashflow difficulty. Long-term IO on your own home usually costs more.

Can I use my super to buy a home?

Not directly, but the First Home Super Saver (FHSS) scheme lets first home buyers make voluntary super contributions at concessional tax rates, then withdraw up to $50,000 to help fund a deposit.

Related calculators

• Borrowing power calculator
• Stamp duty calculator (all states)
• Refinance calculator
• First Home Super Saver (FHSS)
• Rent vs buy calculator
• Investment property calculator
• Take-home pay calculator
• HECS/HELP calculator

Go beyond repayments: model every scenario

Most mortgage calculators stop at your minimum repayment. This one goes further — it models what actually happens to your loan over time under different scenarios. Add extra repayments, keep money in an offset, switch from monthly to fortnightly, or stress-test what happens if rates rise 2% — and see exactly how much interest you save and how many years come off the loan.

Small, boring changes compound into life-changing savings on a 30-year mortgage. This tool shows you the numbers so you can make decisions with confidence rather than guesswork.

Extra repayments — how much can you actually save?

On an Australian home loan, every extra dollar goes straight to principal — cutting the balance interest is calculated on for the rest of the loan. The effect is much bigger than most people expect because interest compounds daily on your balance.

Take a $600,000 loan at 6.20% over 30 years. Minimum repayment is ~$3,676/month, total interest ~$723,000. Now add just $200/month extra:

• Loan paid off in ~26 years instead of 30
• Total interest saved: ~$95,000
• Total extra you paid: only $62,400 (over the shortened term)
• Net saving: $32,600 in your pocket

Bump it to $500/month extra and you finish in about 22 years, saving more than $200,000 in interest. The calculator lets you play with any extra amount to see your specific numbers.

Offset accounts — the hidden power move

An offset account is a transaction account linked to your mortgage where every dollar reduces the balance interest is calculated on — but the money stays yours and instantly accessible. It's the single most tax-efficient way to save money in Australia because the effective "return" (interest saved) is completely tax-free.

Example: $600,000 loan at 6.20%. Keep $30,000 in the offset long-term:

• Interest is now charged on $570,000 instead of $600,000
• Interest saved per year: ~$1,860
• Equivalent to earning a savings account interest rate of 6.20% tax-free
• To match that in a savings account (5% tax bracket), you would need ~9% pre-tax

The calculator shows you cumulative offset savings over the loan life. Keep an emergency fund, salary buffer, or holiday savings in your offset instead of a savings account and the compounding is dramatic.

Fortnightly vs monthly — the free trick worth thousands

Most Australians pay their mortgage monthly by default. Switching to fortnightly repayments — where the fortnightly amount is half the monthly amount — is the biggest single "free" saving you can make.

Why? A year has 12 months but 26 fortnights. If you pay half your monthly amount every fortnight, you end up making 13 monthly equivalents per year — one extra repayment straight to principal, every year, no extra pain.

On a $600,000 loan at 6.20%, switching to true fortnightly (not "monthly ÷ 2 = fortnightly amount") shaves about 5 years off the loan and saves roughly $140,000 in interest. Beware: some lenders offer "fortnightly" that's actually just monthly-÷-2 with no extra payment — always check.

Stress-testing: what if rates rise 2%?

Australian banks are required to assess your loan at 3% above your actual rate to check serviceability. That means your loan already assumes you could pay significantly more — but does your budget actually cope?

Simulate a 2% rate rise on a $600,000 loan at 6.20%:

• Current monthly repayment: ~$3,676
• Repayment at 8.20%: ~$4,478
• Extra per month: +$802
• Extra per year: +$9,624

This is why serious borrowers keep a "rate-rise buffer" in their offset. If rates rise, you already have the cash to cover the higher payments without touching your lifestyle.

The lump sum question — inheritance, tax refund, work bonus

Get a $50,000 windfall — inheritance, work bonus, sold shares? Should you dump it into the mortgage or keep it invested?

On a $600,000 mortgage at 6.20% with 25 years remaining:

• $50,000 lump sum straight to the loan: saves ~$83,000 in interest and pays it off ~3 years early
• Effective guaranteed return: 6.20% tax-free (equivalent to ~9% pre-tax at the top marginal rate)
• Alternative: $50,000 invested in ETFs at long-term ~8% pre-tax returns beats the loan on paper — but only if you can stomach volatility and don't need the money
• Compromise: put it in the offset for guaranteed savings while keeping full access to the cash

For most Australians the offset option wins — you get the interest saving of paying it down PLUS the flexibility of a savings account.

When does splitting your loan make sense?

Split loans let you divide your mortgage into fixed and variable portions — for example 60% variable with offset, 40% fixed for 2-3 years. This gives you:

• Payment certainty on part of the loan (protection against rate rises)
• Offset flexibility on the variable portion (for savings buffer)
• Ability to make unlimited extra repayments on variable side
• Some cushion if rates fall (variable portion benefits)

The trade-off: split loans limit your extra repayment flexibility on the fixed portion (usually $10-30k per year cap). Use the refinance calculator to check whether restructuring to a split loan is worth the exit costs.

Combining strategies — the compound effect

Individual moves are powerful. Combined, they're transformative. Take a $600,000 loan at 6.20% over 30 years and apply all four:

• Switch to fortnightly repayments
• Add $300/month extra
• Keep $20,000 in offset (typical salary/emergency buffer)
• Every tax refund straight into offset

Combined result: loan paid off in around 19-20 years instead of 30, saving well over $250,000 in interest. That's a decade of your working life freed up and a house owned outright a decade earlier.

More mortgage questions

Extra repayments vs offset — which is better?

Interest savings are identical dollar-for-dollar. The difference is flexibility: offset money stays accessible, extra repayments technically become the bank's until you redraw. For most people, offset wins because emergencies happen. If you have a tendency to spend savings, extra repayments create useful friction.

Does making extra repayments reduce my minimum required payment?

Usually no — extra payments reduce the balance and shorten the loan term, but your minimum required payment stays the same. Some lenders allow you to "recalculate" repayments after extras (reducing monthly amount instead of term) — check your loan contract.

If I use redraw, does it affect tax deductibility later?

If you plan to turn your home into an investment property one day, redraw can wreck the tax deductibility of your interest. Offset accounts don't have this problem. Speak to a tax professional if this is on your radar.

What's the difference between principal-and-interest and interest-only?

P&I means each repayment reduces the loan balance and pays interest. Interest-only pays only the interest — the balance doesn't move. IO is mostly used by investors for tax reasons; for owner-occupiers it usually means paying more interest over the life of the loan.

How does the RBA cash rate affect my repayments?

The RBA sets the cash rate; banks decide when and how much of a change to pass on to variable rate mortgages. Typically most of a cut or rise flows through within 1-2 months. Fixed loans are protected during the fixed period, but you get hit hard when rolling off. Use the calculator to stress-test both scenarios.

Should I refinance to a lower rate?

Almost always yes if you can get at least 0.30% lower and haven't refinanced in the last 2 years. Refinancing costs are typically $500-1500 and the rate saving usually pays it back in months. Check with the refinance calculator.