14/08/2026
One of the biggest misconceptions I hear is:
" ๐๐ฉ๐ฆ ๐ฃ๐ข๐ฏ๐ฌ ๐ช๐ด ๐ค๐ฉ๐ข๐ณ๐จ๐ช๐ฏ๐จ ๐ฎ๐ฆ ๐ช๐ฏ๐ต๐ฆ๐ณ๐ฆ๐ด๐ต ๐ฐ๐ฏ ๐ช๐ฏ๐ต๐ฆ๐ณ๐ฆ๐ด๐ต ๐ฆ๐ท๐ฆ๐ณ๐บ ๐ฅ๐ข๐บ"
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๐๐จ๐ฎ๐ซ ๐ก๐จ๐ฆ๐ ๐ฅ๐จ๐๐ง ๐ข๐ง๐ญ๐๐ซ๐๐ฌ๐ญ ๐ข๐ฌ ๐๐๐ฅ๐๐ฎ๐ฅ๐๐ญ๐๐ ๐๐๐๐๐ - ๐๐ฎ๐ญ ๐ข๐ญ ๐ข๐ฌ ๐๐๐ ๐๐จ๐ฆ๐ฉ๐จ๐ฎ๐ง๐ ๐ข๐ง๐ญ๐๐ซ๐๐ฌ๐ญ
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Understanding how your home loan interest is calculated can help you make smarter decisions and potentially save thousands over the life of your loan.
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๐๐๐๐ญ'๐ฌ ๐ฅ๐จ๐จ๐ค ๐๐ญ ๐๐ง ๐๐ฑ๐๐ฆ๐ฉ๐ฅ๐:
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Loan balance: $140,080
Interest rate: 6.1% p.a.
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First, calculate the daily interest rate: ๐.๐% รท ๐๐๐ = ๐.๐๐๐๐๐% ๐ฉ๐๐ซ ๐๐๐ฒ
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Then, calculate that day's interest based on the loan balance at the end of the day: $๐๐๐,๐๐๐ ๐ฑ (๐.๐% รท ๐๐๐) = $๐๐.๐๐
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The daily interest is calculated on the ๐จ๐ฎ๐ญ๐ฌ๐ญ๐๐ง๐๐ข๐ง๐ ๐ฅ๐จ๐๐ง ๐๐๐ฅ๐๐ง๐๐.
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The bank repeats this calculation ๐๐ฏ๐๐ซ๐ฒ ๐๐๐ฒ, using that dayโs closing loan balance. The daily interest is then accumulated and is normally debited to your loan monthly.
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๐ก๐๐ข๐ฉ๐ฌ ๐ญ๐จ ๐ซ๐๐๐ฎ๐๐ ๐ญ๐ก๐ ๐ข๐ง๐ญ๐๐ซ๐๐ฌ๐ญ ๐ฒ๐จ๐ฎ ๐ฉ๐๐ฒ๐ก
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Make extra repayments whenever you can. Every extra dollar reduces your loan balance. A lower balance means less interest is calculated each day.
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Keep your savings in an offset account. The money in your offset reduces the balance the bank uses to calculate interest.
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โ ๏ธ ๐๐ข๐ฌ๐๐ฅ๐๐ข๐ฆ๐๐ซ:
This post is for ๐ ๐๐ง๐๐ซ๐๐ฅ ๐ข๐ง๐๐จ๐ซ๐ฆ๐๐ญ๐ข๐จ๐ง ๐๐ง๐ ๐๐๐ฎ๐๐๐ญ๐ข๐จ๐ง๐๐ฅ ๐ฉ๐ฎ๐ซ๐ฉ๐จ๐ฌ๐๐ฌ ๐จ๐ง๐ฅ๐ฒ and does not constitute financial, credit, legal or tax advice. Interest calculation methods, repayment arrangements and offset account features can vary between lenders and loan products. Please refer to your loan contract and speak with your lender or a qualified financial professional for advice specific to your circumstances.