Overview
How will you choose between Principal & Interest (P/I) and Interest Only (I/O) repayment loan? This How to Structure Home Loan Calculator will show the repayment difference between P/I an I/O repayment loan by factoring in variables such as loan repayment frequency, purpose of the property (investment, PPOR, or PPOR to investment), and When to Sell the property.
You can use this calculator to create many different scenarios by adjusting variables including loan type (P/I or I/O), loan repayment frequency, purpose of the property (investment, PPOR, or PPOR to investment), timing to sell the property, and whether to invest savings from I/O loan.
Normally the scheduled repayment of a P/I loan is higher than that of an I/O loan for each term (no matter monthly, fortnightly, or weekly). This is becuase you need to repay the principal and interest if you choose a P/I loan while you only need to pay the interest for an I/O loan. This calculator allows you to see how they compare over the long term if you invest the repayment difference. You can adjust the investment return rate.
Here is a screenshot that will give you a better idea that what you need to do and what this How to Structure Home Loan Calculator can do for you.
Things You Need to Know
This calculator is built in Microsoft Excel worksheet. You need to have Microsoft Excel® 2013 & Above for Microsoft Windows® OR Microsoft Excel 2016 & Above for Mac® to use it. You need to enable Macro in Excel so this tool will work.
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Important Assumptions
Please note: This How to Structure Home Loan Calculator is built based on the following assumptions.
(1) All months are assumed to be of equal length. One year is assumed to contain exactly 52 weeks or 26 fortnights. This implicitly assumes that a year has 364 days rather than the actual 365 or 366.