Mortgage
Calculator Australia 2026

This mortgage repayment calculator uses the standard annuity formula that Australian banks use to determine your regular repayment amount. For a principal and interest loan, the formula takes your total loan amount, divides it by a factor that accounts for compound interest over the full loan term, and arrives at a fixed repayment that fully pays off both the borrowed amount and all interest charges by the end of the term. Every repayment you make is split between an interest portion (charged on the remaining balance) and a principal portion (which reduces your balance). In the early years of a 30-year loan, the vast majority of each repayment goes toward interest. As the balance shrinks over time, the interest portion decreases and more of each payment goes toward reducing the principal.

For example, a $600,000 loan at 6.50% over 30 years with principal and interest repayments costs $3,792 per month. Over 30 years you will pay $765,167 in total interest, making the true cost of your home $1,365,167. Switching to fortnightly repayments of $1,896 saves approximately $89,000 in interest and pays off the loan 4 years earlier. This is because fortnightly repayments result in 26 payments per year, which is the equivalent of 13 monthly payments instead of 12, accelerating your principal reduction without noticeably increasing your budget.

Interest-only repayments work differently. Instead of paying down the loan, you only cover the interest charge each month. On the same $600,000 loan at 6.50%, that is $3,250 per month. Your loan balance stays at $600,000 for the entire interest-only period. While this gives you lower repayments in the short term, you are not building any equity and you will owe exactly the same amount at the end of the IO period. When the loan reverts to principal and interest repayments (typically after one to five years), your repayments will jump significantly because you now have to pay off the full principal over a shorter remaining term.

P&I vs Interest-Only: Which Is Right for You?

Principal and interest repayments are the standard choice for owner-occupiers in Australia. Each payment reduces your loan balance, building equity in your home from day one. Over a 30-year term at 6.50%, a P&I borrower with a $600,000 loan will pay a total of approximately $765,000 in interest. By contrast, an interest-only borrower paying the same rate for five years before reverting to P&I over 25 years will pay considerably more in total interest because the principal is untouched during the IO period and must be repaid over a shorter remaining term. Interest-only loans are most commonly used by Australian property investors because the interest portion is tax-deductible against rental income under negative gearing rules. For owner-occupiers, P&I is almost always the better long-term option unless you need temporary cash flow relief during a specific period, such as renovating or taking parental leave.

How Offset Accounts Work

An offset account is one of the most powerful features of an Australian home loan. It is a standard transaction account linked to your mortgage where the balance is subtracted from your loan principal before interest is calculated each day. If your loan is $500,000 and your offset balance is $60,000, you only pay interest on $440,000. The money in the offset remains fully accessible for everyday spending and emergencies, unlike making extra repayments which can be harder to redraw. Over a 30-year loan, maintaining an average offset balance of $50,000 on a $600,000 loan at 6.50% can save you more than $130,000 in interest and shorten the loan by several years. Most variable-rate loans offer a 100% offset account, though some fixed-rate products offer partial offset. When comparing loans, the value of a good offset account can outweigh a slightly lower interest rate.

The True Cost of Your Mortgage

Many Australian homebuyers focus on the purchase price and monthly repayment without considering the total cost of their mortgage over its full term. On a $600,000 loan at 6.50% over 30 years, you will repay a total of approximately $1,365,000, meaning you pay more in interest ($765,000) than the original loan amount itself. This is why even small rate reductions matter enormously. Reducing your rate by just 0.25% on a $600,000 loan saves roughly $30,000 over 30 years. Similarly, making one extra monthly repayment per year (easily achieved by switching from monthly to fortnightly payments) can cut four to five years off your loan term. Understanding the true lifetime cost of your mortgage empowers you to negotiate harder on rates, make strategic extra repayments, and use tools like offset accounts to minimise interest and build wealth faster.