Loan Payment Calculator - Fixed vs Declining Instalments

How much does a $300,000 mortgage really cost over 25 years?

At 7% annual interest with fixed instalments, you repay $636,101 in total. The interest alone - $336,101 - exceeds the original loan. Switch to declining instalments and the total drops to $563,375, saving $72,726. The trade-off: your first payment is $2,750 instead of $2,120. This calculator runs both scenarios so you can decide which path fits your budget.

Fixed instalments - total cost

$636,101

$2,120/month for 300 months

Declining instalments - total cost

$563,375

$2,750 first, $1,007 last

How to use this calculator - step by step

Loan amount - enter the net principal, not including fees or insurance. For a $350,000 house with a 20% down payment, that is $280,000.
Annual interest rate - the nominal rate from your lender. Mortgages typically range from 5% to 8%, personal loans from 6% to 15%.
Repayment period - in years. Mortgages: 15-30 years. Personal loans: 1-7 years. A shorter term means higher payments but far less total interest.
Instalment type - fixed (annuity) gives you the same payment every month. Declining (reducing) starts higher but drops steadily and costs less overall.
Read the results - you see the monthly payment (or first/last for declining), total interest, number of payments, total repayment and the interest ratio per $100 borrowed.

Monthly payment and total cost comparison

Fixed instalments for a $300,000 loan at different rates and terms.

Rate / Term	15 years	20 years	25 years	30 years
5% - payment	$2,372	$1,980	$1,754	$1,610
5% - total interest	$127,029	$175,168	$226,131	$279,767
7% - payment	$2,696	$2,326	$2,120	$1,996
7% - total interest	$185,367	$258,215	$336,101	$418,527
8.5% - payment	$2,954	$2,603	$2,416	$2,307
8.5% - total interest	$231,759	$324,833	$424,704	$530,427

Fixed vs declining instalments

Fixed (annuity)

Every payment is identical. Budgeting is simple - you know the exact amount for the entire loan duration. Early payments are mostly interest; the capital portion grows over time.

Best for: predictable monthly expenses, first-time borrowers, tighter budgets.

Declining (reducing)

The capital portion stays constant; only the interest shrinks. The first instalment is the highest, and each subsequent one is lower. Total interest is 20-25% less than with fixed payments.

Best for: higher initial income, long-term savings, borrowers who prioritize total cost.

Practical examples

$200,000 at 6% for 30 years, fixed - monthly payment: $1,199. Total interest: $131,677. Total repaid: $331,677.

$200,000 at 6% for 30 years, declining - first payment: $1,556, last: $558. Total interest: $180,500. Savings vs fixed: $51,176.

$50,000 personal loan at 9% for 5 years, fixed - monthly payment: $1,038. Total interest: $12,285.

$400,000 at 7.5% for 20 years, fixed - monthly payment: $3,222. Total interest: $373,369. Interest ratio: $93 per $100 borrowed.

$150,000 at 5% for 15 years, declining - first payment: $1,458, last: $840. Total interest: $56,563. Same loan with fixed payments costs $63,514 in interest.

FAQ - Frequently asked questions

Fixed or declining - which should I choose?

If your budget is tight or unpredictable, fixed instalments are safer - same amount every month, no surprises. If you can handle a higher initial payment and want to save on total interest, declining is the better deal. On a $300,000 / 7% / 25-year mortgage, declining saves roughly $72,700 in interest. The first payment is about 30% higher, but it drops every month.

Why does a longer term cost so much more?

Interest compounds on the remaining balance. A $300,000 loan at 7% costs $185,367 in interest over 15 years but $418,527 over 30 years - more than double. The monthly payment drops from $2,696 to $1,996 (only $700 less), but the extra 15 years of interest add $233,000. Shorter terms are more expensive monthly but far cheaper overall.

What is the annuity formula?

The fixed instalment is calculated as: PMT = P x r x (1+r)^n / ((1+r)^n - 1), where P is the principal, r is the monthly rate (annual rate / 12), and n is the total number of payments (years x 12). For $300,000 at 7% for 25 years: r = 0.07/12 = 0.005833, n = 300. PMT = $2,120.

Can I switch from fixed to declining mid-loan?

Most lenders allow a change from fixed to declining (or vice versa), but it usually involves an amendment to the loan agreement and may incur a fee. Some banks offer this as a free option once per year. Check your loan contract or contact your lender. If switching is not possible, you can achieve a similar effect by making voluntary overpayments on a fixed instalment loan - this reduces the principal faster, shortening the term or lowering future payments.

Does this calculator account for fees and insurance?

No. This calculator works with the net principal and nominal interest rate. Real-world loan costs include origination fees (0.5-2% of the loan), mortgage insurance (if down payment is below 20%), property insurance and sometimes life insurance. To see the true cost, check the APR (Annual Percentage Rate) which your lender is legally required to disclose - it includes all mandatory fees rolled into an equivalent annual rate.

How does overpaying affect the loan?

Overpaying reduces the remaining principal, which means less interest accrues in subsequent months. On a $300,000 / 7% / 25-year fixed mortgage, adding just $200/month in overpayments saves roughly $76,000 in interest and shortens the loan by about 5 years. The earlier you start overpaying, the larger the effect - early payments save more because the balance is highest.

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