Loan Amortisation Calculator

A loan is amortised when each repayment covers that period’s interest and pays off some of the balance, so the balance reaches zero at the end of the term. The repayment stays the same; the split inside it changes.

Take $800,000 over 25 years at 5.9%, repaid monthly: $5,105.62 a month. The first repayment is $3,933.33 of interest — $800,000 × 5.9% ÷ 12 — and $1,172.29 off the balance. The next month the balance is a little lower, so the interest is a little lower and a little more of the same repayment comes off the loan.

In that example the principal part of the repayment does not overtake the interest part until repayment 160, in the loan’s fourteenth year. After ten years, 40% of the way through the term, the balance is still $608,926: less than a quarter of the loan repaid. It does not halve until year 17.

Over the full 25 years the interest comes to $731,686. That is 91% of the amount borrowed, and almost half of everything repaid.

• $500 a month extra from the start saves $149,224 of interest and 53 repayments. The loan is paid off in February 2046 instead of July 2050.
• The same $500 a month, started ten years in, saves $46,668 — less than a third as much.
• A one-off $20,000 in the second year saves $58,858. Paid in year 16, the same $20,000 saves $15,332.
• $5,000 once a year — a tax refund, say — saves $122,454 and clears the loan in November 2046.

Extra repayments are worth most early, because every dollar off the balance stops attracting interest for the rest of the loan. Variable loans usually take extra repayments freely; fixed loans often cap them. The pay off your home faster calculator compares extra repayments with an offset account.

Switching the same loan to fortnightly repayments of $2,355.08 — the monthly repayment × 12 ÷ 26 — changes very little: $886 less interest over 25 years.

The saving people talk about comes from paying half the monthly repayment every fortnight: $2,552.81. There are 26 fortnights in a year, so that adds up to 13 monthly repayments rather than 12, and it clears the loan in July 2046, four years early, saving $133,134. Lenders set fortnightly repayments either way, so it is worth checking which yours uses.

• Daily interest. Lenders work out interest on each day’s balance and charge it monthly, so a 31-day month costs a little more than a 28-day one. This schedule charges an even twelfth of the annual rate each month; over a year the two come out almost the same.
• Rate changes. A variable rate moves, and your lender recalculates the repayment when it does. The schedule assumes today’s rate for the whole loan — the mortgage repayment calculator shows what a rate rise would add.
• Fees and timing. Account fees, your exact repayment day and repayments that fall on a weekend move the figures slightly.

Choose Repayments to see each repayment in a year, or download the whole schedule as a spreadsheet. If your loan has an offset account, the offset account calculator shows what it saves; if your rate is higher than new customers are being offered, the refinance calculator shows whether switching pays.