Calculate your loan repayments for any loan type. See how extra repayments save you time and money.
Loan Details
$5k$2M
2%15%
1 year30 years
$0$2,000
Monthly Repayment
$0.00
Loan Summary
Total Interest$0
Total Payable$0
Paid Off In0.0 years
Important Note
This calculator provides estimates only. Actual repayments may vary based on lender fees, charges, and specific loan terms. Check your loan contract for early repayment fees.
Understanding Loan Repayments in Australia
Australian home loans and personal loans use principal and interest (P&I) amortisation, where each payment covers both the borrowed amount and interest charges. The repayment amount is calculated so that you fully repay the loan over the agreed term with consistent payments. Most borrowers choose monthly repayments, but weekly and fortnightly options can save thousands.
Switching to fortnightly or weekly repayments is one of the easiest ways to save money without changing your budget. Because there are 52 weeks (or 26 fortnights) in a year, making fortnightly payments means you make the equivalent of 13 monthly payments per year instead of 12. This extra payment goes entirely toward principal, reducing interest and shortening your loan term by years.
Extra repayments have a compounding effect. Every dollar of extra repayment reduces the principal immediately, which reduces the interest calculated in the next period. Over time, this snowballs - you pay less interest, which means more of each future payment goes to principal, which further reduces interest. This is why making extra repayments early in the loan term saves the most money.
Most variable rate loans in Australia allow unlimited extra repayments without fees, and many have redraw facilities so you can access those funds if needed. Fixed rate loans typically limit extra repayments to $10,000-$30,000 per year before break fees apply. Always check your loan terms before making large lump sum payments on a fixed loan.
Frequently Asked Questions
How do weekly or fortnightly repayments save me money?
Weekly and fortnightly repayments save money because you make the equivalent of 13 monthly payments per year instead of 12. There are 52 weeks in a year, so weekly repayments equal 52 payments. If you divide your monthly repayment by 4 and pay weekly, you make 52 payments annually, which is 4 extra weeks compared to 12 monthly payments (48 weeks). This means you pay down principal faster and reduce the interest charged over the life of the loan. For a $400,000 loan at 6.5% over 30 years, switching from monthly to fortnightly could save $20,000+ in interest and reduce the loan term by 2-3 years.
How much can extra repayments save me?
Extra repayments can save enormous amounts of interest and time. Even small additional payments make a big difference because they reduce the principal faster, which reduces the interest calculated each period. For example, on a $500,000 loan at 6% over 30 years, paying an extra $200/month saves approximately $80,000 in interest and pays off the loan 5 years earlier. An extra $500/month saves around $170,000 and cuts 11 years off the term. The savings compound exponentially - the earlier you make extra payments, the more you save. Use the calculator above to see exact savings for your loan.
What is the difference between principal and interest repayments?
Principal and interest (P&I) loans are standard repayment loans where each payment covers both the loan amount (principal) and the interest charged. Early in the loan, most of your payment goes to interest because the principal balance is high. Over time, as you pay down principal, more of each payment goes toward the loan amount itself. This is called amortisation. Interest-only (IO) loans are different - you only pay the interest for a set period (typically 1-5 years), with principal repayments starting after that. IO loans cost more overall because the principal doesn't reduce during the IO period.
Should I use an offset account or make extra repayments?
Both offset accounts and extra repayments reduce interest, but work differently. An offset account is a savings account linked to your loan - the balance offsets your loan for interest calculation purposes. If you have a $400,000 loan and $50,000 in offset, you only pay interest on $350,000. Offset gives you flexibility to access funds anytime. Extra repayments directly reduce your loan principal, locking that money into the loan (though many loans allow redraw). Offset is better if you need flexibility or have variable income. Extra repayments are simpler and available on more loan types. Both save identical amounts of interest if amounts are equal.
Can I make extra repayments on a fixed rate loan?
Most fixed rate loans in Australia allow limited extra repayments, typically $10,000-$30,000 per year without penalty. Amounts above this limit incur break fees (also called economic cost), which can be substantial. Lenders charge break fees because they've locked in funding costs for your fixed term - early repayment disrupts this. Variable rate loans generally allow unlimited extra repayments without fees. If you plan to make large extra repayments, choose a variable loan or a fixed loan with high extra repayment limits. Some lenders offer partial fixes (e.g., 50% fixed, 50% variable) to provide flexibility while maintaining rate security.
What is loan amortisation and how does it work?
Amortisation is the process of gradually paying off a loan through regular payments. Each payment is split between principal and interest, with the split changing over time. In early years, most of your payment is interest because the principal balance is high. As you pay down principal, less interest accrues, so more of each payment goes to principal. This creates an accelerating effect. For a 30-year loan at 6%, your first payment might be 80% interest and 20% principal, while your final payment is 95% principal and 5% interest. The total payment stays the same (for fixed rate loans), but the composition shifts. This is why extra repayments early in the loan save the most money.
How does my repayment frequency affect the loan term?
Repayment frequency directly affects your loan term if you increase payment frequency without changing the total annual amount. Switching from monthly to fortnightly (paying half the monthly amount every 2 weeks) results in 26 payments per year instead of 12 monthly payments, effectively making one extra monthly payment annually. This pays down principal faster and reduces the loan term. On a $350,000 loan at 6.5% over 25 years, switching from monthly ($2,388) to fortnightly ($1,194 every 2 weeks) reduces the term to approximately 22.5 years and saves $35,000+ in interest. Weekly payments save even more. The higher frequency accelerates principal reduction.
Should I pay off my loan faster or invest the money?
This depends on your loan interest rate, investment returns, risk tolerance, and tax situation. If your loan rate is 6.5% and you can earn 8% after-tax through investments, investing makes mathematical sense. However, loan repayments provide guaranteed "returns" (saved interest) with zero risk, while investments fluctuate. Most Australians benefit from paying down non-deductible debt (home loans for owner-occupiers) first, as the savings are tax-free and risk-free. If your loan is for an investment property (tax-deductible), the math favors investing instead. A balanced approach is common: make some extra repayments while also investing. Consider your full financial picture, emergency fund needs, and seek financial advice for your situation.
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