Worked example
Borrow $250,000 at 6% a year for 25 years and the Monthly payment is $1,611. You pay $233,226 as interest, so you repay $483,226 in all.
- Loan amount
- $250,000
- Interest rate (per year)
- 6%
- Loan term
- 25 years
- Monthly payment
- $1,611
- Total interest
- $233,226
- Total payment
- $483,226
| Year | Paid in the year | Interest | Principal | Balance at year end |
|---|---|---|---|---|
| 1 | $19,329 | $14,879 | $4,450 | $245,550 |
| 2 | $19,329 | $14,604 | $4,725 | $240,825 |
| 3 | $19,329 | $14,313 | $5,016 | $235,809 |
| 4 | $19,329 | $14,004 | $5,325 | $230,484 |
| 5 | $19,329 | $13,675 | $5,654 | $224,830 |
| 10 | $19,329 | $11,703 | $7,626 | $190,880 |
| 15 | $19,329 | $9,043 | $10,287 | $145,086 |
| 20 | $19,329 | $5,454 | $13,875 | $83,317 |
| 25 | $19,329 | $614 | $18,715 | $0 |
How to use this calculator
- Enter the amount you want to borrow.
- Enter the annual interest rate quoted by the lender.
- Choose the loan term in years or months.
- Read the monthly instalment, total interest and total repaid.
- Pick a chart view, open any year in the schedule, or download it as a CSV file.
Instalments use the standard reducing-balance (annuity) method: $250,000 at 6% over 25 years gives $1,610.75 a month.
Frequently asked questions
What does the monthly instalment cover?
Interest for the month plus a repayment of part of the amount borrowed. Arrangement fees, insurance and any other charges are not included; add them separately when comparing offers.
Why is most of an early instalment interest?
Interest is charged on the balance outstanding, which is highest at the start. On $250,000 at 6%, about 77% of the first year’s instalments goes on interest; the share falls steadily as the balance is repaid.
Is a shorter loan term better?
A shorter term means higher instalments but much less interest. Repaying $250,000 at 6% over 20 years instead of 25 raises the instalment from $1,611 to $1,791, but cuts total interest from $233,226 to $179,859.
How much does a lower rate save?
At 5.5% instead of 6%, the instalment on $250,000 over 25 years falls by $76 and total interest by $22,660.
Can I use this in my own currency?
Yes. The calculation is the same everywhere; choose your currency at the top of the page to show its symbol, or leave amounts as plain numbers.
Does it work for variable-rate loans?
It assumes a fixed rate for the whole term. For a variable or tracker loan, treat the result as an estimate at today’s rate.