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Home Loan Repayment Formula:
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The home loan repayment formula calculates the fixed monthly payment required to fully repay a loan over its term, including both principal and interest. This standard calculation is used by lenders throughout Western Australia.
The calculator uses the standard PMT formula:
Where:
Explanation: The formula accounts for compound interest over the life of the loan, calculating a fixed payment that will pay off both principal and interest by the end of the term.
Details: Understanding your potential mortgage payments helps with budgeting, loan comparison, and determining how much you can afford to borrow when buying property in WA.
Tips: Enter the loan amount in dollars, annual interest rate as a percentage (e.g., 5.5 for 5.5%), and loan term in years. The calculator will show your estimated monthly payment, total repayment amount, and total interest paid.
Q1: Does this include other home ownership costs?
A: No, this calculates only the principal and interest payment. Additional costs like rates, insurance, and maintenance should be budgeted separately.
Q2: How accurate is this calculator?
A: It provides standard principal+interest payment estimates. Actual bank offers may vary slightly due to different calculation methods or fees.
Q3: What's the difference between variable and fixed rates?
A: Variable rates can change during the loan term, while fixed rates stay the same for a set period. This calculator assumes a constant rate.
Q4: Can I calculate fortnightly payments?
A: Yes, divide the monthly payment by 2 for approximate fortnightly payments (26 payments/year = 13 monthly equivalents).
Q5: How does loan term affect payments?
A: Shorter terms mean higher monthly payments but less total interest. Longer terms reduce monthly payments but increase total interest paid.