Mortgage repayment calculator 

A mortgage repayment is the regular payment made to a lender to service a property loan. For investment properties in New Zealand, repayments are structured on either an interest only or principal and interest basis, each with different implications for your cashflow and long-term equity position.

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Interest only: 
Weekly repayment = (Loan amount x Interest rate) ÷ 52

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For example, a $500,000 loan at 5% p.a. costs $500,000 x 0.05 = $25,000 per year or $481 per week. 

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Principal and interest:

Repayments are calculated using a loan amortisation formula that spreads both the interest and a portion of the loan balance across every payment. This is more complex to calculate by hand, since the exact split between interest and principal changes every period - use the calculator above to get an accurate figure for your loan amount, rate and term.

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Interest only repayments cover the cost of borrowing without reducing the loan balance. They produce lower regular payments, making them popular with investors who want to maximise cashflow in the short term. The trade-off is that the loan balance remains unchanged over time, meaning equity is only built through capital growth rather than debt reduction.

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Principal and interest repayments cover both the interest cost and a portion of the loan balance each period. Repayments are higher but the loan reduces over time, building equity through both capital growth and debt repayment. Over a 30-year term, the total interest paid on a P&I loan is significantly lower than the equivalent IO structure.

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For NZ residential investment property, interest only lending is commonly used in the early years of ownership. Lenders will typically require the loan to revert to principal and interest after a fixed IO period, so understanding both repayment structures is important for long-term financial planning.