Amortization Calculator

How Extra Repayments Affect Your Loan

One of the most powerful features of this calculator is the ability to add an extra monthly repayment and instantly see the impact on your loan. Even small additional amounts can make a significant difference over the life of a loan.

For example, on a $500,000 home loan at 6% over 30 years, your monthly repayment would be approximately $2,998. By adding just an extra $200 per month, you could reduce your loan term by several years and save tens of thousands of dollars in interest.

This works because any extra amount you pay reduces your principal balance faster. A lower principal means less interest is charged the following month, which creates a compounding benefit over time.

In Australia, most variable rate home loans allow unlimited extra repayments without penalty. Fixed rate loans may have limits on how much extra you can repay during the fixed term, so it is worth checking your loan conditions before making additional payments.

If you want to see exactly how much you could save by making extra repayments, use our Extra Mortgage Payments Calculator alongside this tool.

Principal and Interest vs Interest-Only Loans in Australia

When taking out a home loan in Australia, you will typically have the choice between a principal and interest (P&I) loan and an interest-only loan. Understanding the difference is important when planning your repayments.

Principal and Interest (P&I) With a P&I loan, every repayment covers both the interest for the period and a portion of the loan balance. Your debt reduces with every payment, and you will own the property outright at the end of the loan term. This is the most common loan structure for owner-occupiers in Australia.

Interest Only With an interest-only loan, your repayments only cover the interest charged for a set period — usually one to five years. Your loan balance does not reduce during this time. At the end of the interest-only period, the loan reverts to P&I repayments, which will be higher than they would have been if you had started with P&I from the beginning. Interest-only loans are more common among property investors, though they are assessed more strictly by Australian lenders following APRA guidelines.

This amortization calculator is designed for P&I loans. If you are on an interest-only loan and want to model what your repayments will look like after the interest-only period ends, simply enter the remaining loan balance and remaining term after the interest-only period.

Frequently asked questions

What is the difference between amortization and a repayment schedule?

They refer to the same thing. An amortization schedule is a repayment schedule that shows how each payment is split between principal and interest over the life of your loan. The term amortization is more commonly used in the United States, while Australians often refer to it simply as a loan repayment schedule.

Why do I pay more interest at the start of my loan?

Interest is calculated on your outstanding loan balance. At the start of your loan, your balance is at its highest, so the interest charged is also at its highest. As you make repayments and reduce your balance, less interest is charged each month and more of each payment goes toward principal. This is the nature of amortizing loans.

How much interest will I pay over the life of my home loan?

This depends on your loan amount, interest rate, and loan term. On a $600,000 loan at 6% over 30 years, total interest paid would be approximately $695,000 — more than the original loan amount. Reducing your loan term or making extra repayments can significantly reduce this figure. Use this calculator to see the total interest for your specific loan.

Does making extra repayments change my amortization schedule?

Yes. Extra repayments reduce your principal balance faster, which means less interest is charged in subsequent months. This effectively shortens your loan term and reduces the total interest you pay. Many Australian home loan calculators — including this one — allow you to add an extra monthly repayment to see the updated schedule.

Can I use this calculator for a car loan or personal loan?

Yes. This calculator works for any amortizing loan — home loans, car loans, personal loans, and more. Simply enter the loan amount, interest rate, and term for your specific loan.

What happens to my amortization schedule if my interest rate changes?

If you are on a variable rate loan and your interest rate changes, your repayment amount will be recalculated based on the new rate and your remaining balance. The amortization schedule will reset from that point. If you are on a fixed rate loan, your repayment amount and schedule remain the same for the fixed period.

Is amortization the same as depreciation?

No. Amortization refers to the process of paying off a loan over time. Depreciation is an accounting term that refers to the reduction in value of an asset over time. They are different concepts, though both involve spreading a cost over a period of time.

How do I use this calculator to compare a 25-year vs 30-year loan term?

Simply run the calculator twice — once with a 25-year term and once with a 30-year term — using the same loan amount and interest rate. Compare the monthly repayment amounts and total interest paid for each. A shorter term means higher monthly repayments but significantly less total interest over the life of the loan.

Understand Your Loan Before You Commit

Seeing the full picture of your loan — month by month — puts you in control of your finances. Whether you are comparing loan terms, deciding whether to make extra repayments, or simply want to understand where your money is going, an amortization schedule is one of the most useful tools available to borrowers.

Use this calculator alongside our other free home loan tools to build a complete picture of your borrowing options.

→ Extra Mortgage Payments Calculator

→ Mortgage Calculator

→ Mortgage Refinance Calculator

Content written for cleareveryday.com — for informational purposes only, not financial advice.