Principal and Interest Calculator
Understand how your home loan repayments are split between principal and interest with our easy-to-use calculator.
Principal and Interest Calculator
Understanding Your Repayments
This calculator helps you visualize how much of your loan repayment goes towards the principal (the actual amount borrowed) and how much goes towards interest.
In the early stages of a loan, a larger portion of your repayment typically covers interest. As you pay down the loan, more of your payment goes towards reducing the principal.
Understanding this breakdown can help you make informed decisions about extra repayments and loan structures.
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Frequently Asked Questions
What is the principal portion of a loan?
The principal is the original amount of money borrowed. Each repayment you make reduces this amount, along with the interest.
What is the interest portion of a loan?
Interest is the cost of borrowing money, calculated as a percentage of the outstanding principal. It's the fee you pay to the lender for the use of their money.
How does the interest rate affect my repayments?
A higher interest rate means a larger portion of your repayment will go towards interest, especially in the early years of the loan. This can increase your total cost of borrowing.
Can I reduce the interest I pay?
Yes, by making extra repayments, increasing your repayment frequency, or refinancing to a lower interest rate, you can significantly reduce the total interest paid over the life of the loan.