How is interest calculated?

How is interest calculated is simply on your outstanding balance on a daily basis and charged to your home loan account once a month. For this reason, and because of the number of days between interest charges varies, the amount of interest charged each month may also vary.

To calculate interest only repayments, your loan balance is multiplied by the interest rate, then divided by 365 days in a year, then multiplied by the number of days in the current month.

Go to our loan repayment calculator to make this job easy for you. This calculator will also calculate your weekly, fortnightly, and monthly principle & interest repayments.

Where can I find out my interest rate?

You can find out your current interest rate on the first page of your home loan statement or on your internet banking screen.

Why does interest exist?

The person or company lending money is giving up other uses for that money until the loan is repaid. The interest is supposed to make up for the fact that the person or company could have spent that money in ways that brought in extra value.

Learn the difference between simple interest and compound interest.

You’ve just calculated simple interest, in which you only pay interest on the principal you borrowed. Many credit cards and other loans, however, utilise compound interest, where the interest you owe gathers interest of its own. Compound interest can result in much higher interest over time than simple interest. Use our borrowing capacity calculator to help you calculate principle and interest repayments.

Here’s a side-by-side comparison of interest only vs principle and interest: