See how compound interest builds your savings.
Compounding means interest is calculated on interest already earned or already charged. On savings that works for you; on debt it works against you. The same mechanism that grows a long-term investment is what makes a revolving balance so persistent when only minimum repayments are made. Seeing the curve for your own numbers is usually more persuasive than any general explanation.
How often interest compounds — daily, monthly, annually — changes the outcome, and the difference widens over long periods. Most Australian home loans calculate interest daily and charge it monthly, which is why a deposit sitting in an offset account for even a few days has an effect.
A projection over decades is sensitive to the rate you assume, and small changes to the assumed rate produce large changes at the far end. Treat it as a way to compare scenarios rather than a forecast, and re-run it with a lower assumed rate to see how much the conclusion depends on the optimistic case.
A calculator gives you a starting figure. What a lender will actually approve depends on your income, expenses, credit history and the property, and it varies between lenders. We compare more than 40 lenders on our panel and will tell you where you genuinely stand — see our home loan, refinancing and car loan services, or the suburb pages for Werribee, Tarneit and Point Cook.
The mechanism is the same, but a loan also has repayments reducing the balance. Use the loan repayment or amortisation calculator for a loan.
Use a conservative one and test a range. A projection is only as reliable as its assumption.
Obligation-free chat — message us now and we'll come back with clear options, usually within minutes.