The repayment amount outlined in your client’s letter of offer, and subsequent post-settlement variation confirmation letters, is calculated based on the following:
Loan limit
Remaining loan term or length of the loan
Number of repayments
Interest rate.
If the loan is set up with principal and interest repayments, the repayment amount consists of paying both a principal and interest component, with the proportion of principal and interest changing over the term of the loan.
At the beginning of the loan term, the repayment amount will have more interest than principal. Towards the end of the loan term, the repayment amount will have more principal than interest.
For more, see the ‘Repayment calculation’ section within our Home Loans Product Guide.