Calculate payments, model extra repayments, factor in your offset, handle interest-only periods, and compare two loans side by side. The numbers Australian banks don't show you upfront.
Standard P&I: each payment is fixed. The split between interest and principal changes over time — early payments are mostly interest, later payments are mostly principal. The formula: PMT = P × r / (1 − (1+r)−n), where P is principal, r is the per-period rate, and n is the number of payments.
Compounding is per-payment-period — fortnightly payments compound 26 times a year, monthly payments 12 times. Different frequencies produce slightly different total interest even at the same nominal rate.
An extra repayment applies directly to principal, reducing the balance immediately and the interest charged in every subsequent period. The effect compounds — an early extra payment saves more interest than a late one of the same size.
On a typical $600k 30-year loan at 6.25%, adding just $200/month extra usually pays the loan off ~5-6 years early and saves $150-200k in interest over the life of the loan.
An offset account is a transaction account linked to your loan. Every dollar in offset reduces the balance interest is calculated on, but the balance itself doesn't reduce. You keep full access to the cash while paying less interest.
$50k in offset on a $600k loan at 6.25% saves about $3,125/year in interest. The compounding effect over 30 years is substantial — this calculator models a constant offset balance with optional yearly growth.
Common on investment loans: pay only interest for 1-5 years, then revert to P&I for the remainder. The revert payment is higher than it would have been on a straight 30-year P&I because you're paying down the same principal over fewer years.
Example: $600k IO for 5 years then P&I for 25 years at 6.25% has monthly payments of ~$3,950 from year 6 onwards — vs. $3,695 if it had been P&I from day 1. Plus you've paid 5 years of pure interest with no principal reduction.
"Fortnightly" repayments: most Australian banks let you pay half your monthly payment every fortnight (26 payments/year, which equals ~13 monthly payments). That extra equivalent month per year shaves years off the loan even without "extra repayments." This calculator models true frequency.
Comparison rate: banks must quote a comparison rate that includes fees. This calculator uses your stated rate — to compare lenders properly, use comparison rates, not headline rates.
Variable rate movements: this assumes the rate stays constant for the whole loan. In reality, RBA cash rate moves, and most loans are variable. Run sensitivity analysis by trying the same loan at +1% and +2% rates.
Lender fees and ongoing costs: establishment fees, valuation fees, monthly account-keeping, redraw fees — the comparison mode has an "upfront fees" field, but ongoing fees aren't modelled. Material if you're comparing two lenders closely.