Lenders Mortgage Insurance (LMI) won’t apply if your loan is supported by the Australian Government 5% Deposit Scheme. However, you may still want to understand what it is. LMI is a charge that most lenders require if a home loan deposit is less than 20%. This protects the lender if you can’t repay the loan. It can either be added to your loan or paid upfront.

As you don’t need to pay LMI if you’re part of the Scheme, you’ll make significant savings.

There are two parts to a home loan balance:

• The principal amount: is how much you have borrowed.
• The interest: is an amount your lender charges you based on your principal. Your interest rate is a percentage of your principal. The interest is calculated daily and added to your balance every month.

That means if you’re making principal and interest repayments you’re paying off the following:

• The amount you borrowed (the principal)
• The interest
• Any fees.

By the end of the loan term (up to 30 years), you’ll have repaid the amount borrowed and the total interest owed. Your home will then be mortgage-free.

More about home loan repayments

We calculate your interest in two steps.

First, we multiply the balance on your loan by your interest rate and divide by 365 days in a year. This shows your daily interest charges.

We then add together your daily interest charges for every day in each month, which produces the monthly interest charge shown on your statement.

Finally, we divide this up according to your preferred repayment frequency, whether that’s weekly, fortnightly or monthly. This figure is your repayment amount.

If your loan balance was $500,000 with an interest rate of 4.93% p.a. and monthly repayments, the calculation might look like this:

500,000 x 0.0493 / 365 = $67.53 interest per day

$67.53 x 30 days in September = $2,026 interest for September

You can use our Mortgage Repayment Calculator to estimate repayments and interest charges over the life of a loan. You can also use the calculator to check the effect that extra repayments could have on your home loan.

Planning to use an offset account? Calculate how much interest you could save.

Compare home loans and our interest rates

Variable interest rate

With a variable rate home loan, your rate changes in line with market interest rates. Choose from our basic loan and standard home loan with offset. You could get ahead on your home loan with no cap on extra repayments and no associated break costs.

Fixed interest rate

With a fixed rate home loan, your rate won’t change over your 1-5 year fixed rate period. This also means it won’t be affected by interest rate rises during this time. With a fixed rate you'll know exactly what your interest rate and repayments will be throughout your fixed rate loan term.

Split your home loan

You could get the best of both worlds. Split your balance into separate variable and fixed rate loan amounts.

Compare home loans and our interest rates

Many things affect how fast you can pay down your home loan balance, and how much interest you'll pay.

Extra repayments. The simplest way to pay off your loan sooner is to make additional repayments. These repayments are on top of the repayments you’re obliged to make. Bear in mind, if you have a fixed rate with us, you can only make up to $30,000 in additional repayments. If you make more than the allowed $30,000 during the fixed rate period, break costs will apply.

Repayment type. There are two parts to your home loan balance, the principal (what you borrowed) and the interest (what the bank charges to lend you the money). It makes sense that paying off both will save you money in the long run. As part of the conditions of the Australian Government 5% Deposit Scheme, you'll need to pay principal and interest repayments (P&I). Monthly, fortnightly or weekly repayments. Read more about repayment types.

Monthly, fortnightly or weekly repayments. Repayment frequency can make a difference over time. Just by choosing fortnightly over monthly repayments is the equivalent of making one extra repayment per year.

Offset. If you link an offset account to your Rocket variable home loan, depositing your savings into this account will help to reduce the interest payable on your principal. Calculate how much you could save with an offset account.

More on home loan repayments

Home Insurance (or Building insurance) covers structures and fixtures at your home. It includes your:

• Garage
• Fences
• Paved driveways
• Hot water system
• Air-conditioner.

Contents Insurance covers personal belongings at your home, including your:

• Furniture
• Carpet
• Appliances
• Clothing
• BBQ
• Outdoor furniture
• Kid’s play equipment.

Explore Westpac Home and Contents Insurance

Yes, it could affect your eligibility as during the entire period that the Scheme is in place, you must:

• Continue to live in the purchased property as an owner-occupied property
• Make principal and interest repayments (except during the construction phase of building a new home)
• Not increase the loan term or loan amount.

For more details, please refer to the Scheme website.