Home Financing Calculator
Compare a principal & interest home loan against reducing/constant principal repayment, and estimate the total upfront cost (deposit, stamp duty, legal fees) in Australian Dollars.
Purchase Details
Below a 20% deposit, most lenders require Lenders Mortgage Insurance (LMI), an extra cost not included in this calculator.
Stamp duty is set by your state or territory, not a single national rate — this slider is an effective rate for your total purchase. Use your state revenue office's calculator to confirm your exact amount (first-home buyers often have a concession or exemption).
Typically $1,500–$3,500 in total for an average purchase — get a fixed quote from your conveyancer or solicitor before budgeting.
Principal & Interest vs. Reducing Principal Repayment
Principal & Interest
Reducing/Constant Principal Repayment
💬 In Simple Words
With reducing principal repayment you'd pay $141,375 less total interest than with principal & interest — but your first installment would be $984.71 higher than the principal & interest payment.
Total Upfront Cost
Educational estimate. Stamp duty is set by your state or territory, not a flat national rate — verify your exact amount with your state revenue office's calculator before budgeting your purchase. Does not include Lenders Mortgage Insurance, building insurance, or building/pest inspections.
Principal & Interest vs. Reducing Principal Repayment: Which to Choose?
👋 Simple Explanation
With a principal & interest loan you always pay the same amount each month — easier to budget, but you pay more interest overall. With reducing principal repayment you pay more at the start and less at the end — harder initially, but you end up paying less interest. If you can handle the higher initial installment, reducing principal repayment generally works out cheaper in total. Most home loans in Australia are offered with principal & interest repayments; ask your lender directly if a reducing-installment option is available.
Principal & Interest: monthly payment = P × [r(1+r)ⁿ] / [(1+r)ⁿ − 1] (constant)
Reducing Principal: Principal Portion = P / n (constant); Installment = Principal Portion + Balance × r (decreasing)
Costs of Buying a Home in Australia
Beyond the deposit, buying a home in Australia involves additional costs: stamp duty (set by your state or territory, with concessions or exemptions for eligible first-home buyers), conveyancing or solicitor fees, building and pest inspections, and — if your deposit is below 20% — Lenders Mortgage Insurance (LMI). Add all of these up before deciding how much you need to save for settlement — it's not just the deposit.
Frequently Asked Questions
- What's the difference between principal & interest and reducing/constant principal repayment?
- With a principal & interest loan (the standard structure for home loans in Australia), your monthly payment stays the same for the entire loan term — early on you pay more interest and less principal, and that ratio flips over time. With constant principal repayment, you pay down the same amount of principal each month, so the installment starts higher and decreases — the total interest paid is usually lower than with a principal & interest loan for the same amount. Most home loans in Australia use the principal & interest structure; an interest-only or reducing-installment option is less common but can be requested or negotiated with some lenders.
- What is stamp duty in Australia?
- Stamp duty (transfer duty) is a state and territory tax paid when you buy property in Australia — there's no single national rate, since each state and territory (NSW, VIC, QLD, WA, SA, TAS, ACT, NT) sets its own rates, thresholds, and first-home-buyer concessions or exemptions. It's typically charged on a sliding scale based on the property's value. Confirm the exact amount for your state using your state revenue office's calculator (for example, Revenue NSW or the State Revenue Office Victoria) before budgeting your purchase.
- What is Lenders Mortgage Insurance (LMI)?
- LMI is a one-off insurance premium many lenders require when your deposit is below 20% of the property value. It protects the lender, not you, if you default on the loan — but the cost is passed on to you, either paid upfront or added to your loan balance. LMI can add thousands of dollars to the cost of a purchase, which is one reason a 20% deposit is a common target, though the First Home Guarantee scheme lets some eligible first-home buyers purchase with as little as 5% deposit without paying LMI.