# How to calculate P&I repayment?

Discussion in 'Property Finance' started by kennyboi, 6th Sep, 2015.

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1. ### kennyboiWell-Known Member

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Hi,

I am thinking to switch from IO to PI on my PPOR. I am having trouble trying to work out my monthly repayment.

Say the loan is 1 Mil, and the bank's repayment calculator is showing a repayment of 4972/month, how do I work out how much is for P and how much is for I?

As my offset account grows quicker than P repayment, would the repayment still be fixed at 4972/month, or is it going to a reduced figure? If reduced, how do I calculate this amount?

Thanks

2. ### Peter_TersteegFinance broker and strategistBusiness Member

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The monthly interest component can be calculated to within a few dollars using the following formula:
Amount owing x Interest rate / 12

The balance would be the principal.

With principal & interest loans, you enter into a contract to make a minimum monthly repayment (by your calculation \$4972/month). Even if you have money in an offset account or have made extra repayments, you'll still need to make that minimum monthly repayment. The extra money simply means you owe less, so you'll pay less interest, and more principal in the subsequent payments.

3. ### WaterboyWell-Known Member

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4. ### kennyboiWell-Known Member

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If there is a change in interest, how does this affect repayment amount, and how to calculate the difference?

I use Excel to keep track of IO, but I don't know how to formulate my Excel to keep track of P&I.

5. ### D.T.Specialist Property ManagerBusiness Member

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