Question 1

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

Accepted Answer

Principal & interest (P&I) repayments pay down the loan balance over time, so you own more of the property with each payment. Interest-only (IO) repayments only cover the interest charges, so the loan balance stays the same. IO periods are typically 1-5 years, after which the loan reverts to P&I with higher repayments.

Question 2

Why is the fortnightly repayment not exactly half the monthly?

Accepted Answer

Fortnightly repayments are calculated as monthly repayment x 12 / 26. This gives you 26 fortnightly payments per year, which is equivalent to 13 monthly payments instead of 12. This extra payment accelerates your loan payoff and saves interest over the life of the loan.

Question 3

How does an offset account affect repayments?

Accepted Answer

An offset account reduces the interest charged by offsetting your loan balance with your savings. For example, if you owe $500,000 and have $50,000 in offset, you only pay interest on $450,000. This calculator does not model offset accounts — your actual interest cost may be lower if you maintain an offset balance.

Question 4

Can I make extra repayments?

Accepted Answer

Most variable rate loans allow unlimited extra repayments. Fixed rate loans may have limits (commonly $10,000-$30,000 per year) or charge break costs for excess payments. Check your loan contract for specific terms. Extra repayments can significantly reduce your loan term and total interest paid.

Question 5

How accurate is this calculator?

Accepted Answer

This calculator uses the standard PMT (payment) formula used by banks and lenders. Actual repayments may vary slightly due to offset account balances, redraw facility usage, fee structures, and how your lender calculates daily interest. Use this as a close estimate for comparison purposes.

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