Home Loan Repayments in Australia: What to Expect on Loans from $300k to $1 Million
Published by SWIFT ACCOUNTANTS PTY LTD · Last reviewed
One of the first questions any prospective home buyer asks is: "How much will my repayments be?" This guide provides clear repayment estimates at current 2025–26 interest rates across a range of common loan sizes, and explains the key decisions that affect what you pay each month.
How Home Loan Repayments Are Calculated
Home loan repayments are calculated using an amortisation formula that spreads your principal and interest evenly across the loan term. In the early years of a loan, most of each repayment covers interest — very little reduces the principal balance. Over time, as the principal decreases, the interest component shrinks and more of each payment goes towards repaying the principal.
The key variables are:
- Loan amount (principal): The amount borrowed
- Interest rate: Expressed as an annual percentage rate (APR)
- Loan term: Typically 25 or 30 years in Australia
Estimated Monthly Repayments (P&I, 30-Year Term)
Estimates based on a 6.5% interest rate — a commonly cited mid-range for owner-occupier variable loans in 2025–26 — and a 30-year principal and interest loan.
| Loan Amount | Monthly | Fortnightly |
|---|---|---|
| $300,000 | $1,896 | $948 |
| $400,000 | $2,528 | $1,264 |
| $500,000 | $3,160 | $1,580 |
| $600,000 | $3,792 | $1,896 |
| $700,000 | $4,424 | $2,212 |
| $800,000 | $5,056 | $2,528 |
| $900,000 | $5,688 | $2,844 |
| $1,000,000 | $6,321 | $3,160 |
Figures are indicative estimates at 6.5% p.a. Actual repayments vary by lender, rate type (fixed/variable), and loan structure.
Variable vs Fixed Rate Home Loans
Variable rate loans move in line with changes to the RBA cash rate and the lender's own funding costs. They typically offer more flexibility — including offset accounts, redraw facilities, and the ability to make extra repayments without penalty.
Fixed rate loans lock your interest rate for a set period (commonly 1, 2, 3, or 5 years). They provide repayment certainty and protection against rate rises during the fixed term, but generally come with limits on extra repayments and exit fees (break costs) if you refinance or sell during the fixed period.
Split loans allow you to fix a portion of your loan while keeping the remainder variable — providing a balance of certainty and flexibility.
The Impact of Rate Changes on a $600,000 Loan
| Interest Rate | Monthly Repayment | Total Interest (30 yrs) |
|---|---|---|
| 6.0% | $3,597 | $694,920 |
| 6.5% | $3,792 | $765,120 |
| 7.0% | $3,992 | $837,120 |
| 7.5% | $4,196 | $910,560 |
A 1.5% difference in rate over 30 years on a $600,000 loan equals over $215,000 in additional interest. This underscores the importance of shopping around and reviewing your loan regularly.
Fortnightly vs Monthly Repayments
Making repayments fortnightly rather than monthly results in 26 fortnightly payments per year — equivalent to 13 monthly payments rather than 12. This effectively makes one extra monthly repayment per year, which over a 30-year loan can:
- Reduce the loan term by approximately 3–4 years
- Save tens of thousands of dollars in interest
Most Australian lenders offer fortnightly repayment options at no additional cost.
Offset Accounts and Redraw Facilities
An offset account is a transaction account linked to your home loan. The balance in the offset account reduces the principal on which interest is calculated each day. For example, $50,000 sitting in an offset account linked to a $600,000 loan means you are only charged interest on $550,000.
A redraw facility allows you to make extra repayments into your loan and draw them back out if needed. While less tax-effective than an offset account in investment property scenarios, redraw can still accelerate loan repayment meaningfully.