Loan tenure calculator
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Term is the lever borrowers reach for first and understand least. Stretching it makes the instalment fall, which feels like a saving, while the total cost rises sharply. Knowing the shape of that trade — how much the payment actually drops, against how much the interest actually climbs — is what makes it a decision rather than a reflex.
The formula
n = −log(1 − P·r ÷ E) ÷ log(1+r). The useful property hides in the logarithm: below a payment of P·r the expression is undefined, because a payment smaller than the monthly interest never clears the loan at all.
A worked example
A $250,000 loan at 8.75% over 20 years:
| Monthly instalment | $2,209 |
|---|---|
| Total interest | $280,225 |
| Total repaid | $530,225 |
| Interest vs loan | 112% |
| Interest in month 1 | $1,823 |
| Interest in the final month | $16 |
What to watch
- Doubling the term does not halve the instalment. On typical rates it falls by around a third, while the interest more than doubles.
- A payment below the monthly interest never clears the balance. That is not a long loan, it is a growing one.
- On a floating rate most lenders adjust the term rather than the instalment, so your end date moves without any notice you are likely to read.
- Shortening a term later is usually free and reversible through prepayment; lengthening it usually requires the lender's agreement.
The trap
Choosing the longest term available to maximise what you are approved for. It works, and you pay for it for decades.
Questions
What loan tenure should I choose?
The shortest one whose instalment you can comfortably sustain through a bad month, not the one that maximises approval. The difference in total interest between twenty and thirty years on the same loan is usually enormous.
Can I change the tenure later?
Shortening it is usually straightforward: prepay and ask the lender to keep the instalment. Lengthening it generally needs their agreement and sometimes a fee, so it is not a reliable escape route.
What happens to my tenure if rates rise?
On a floating-rate loan, most lenders keep the instalment and extend the term. A rate rise can therefore add years to your loan without changing anything on your bank statement — check the revised closing date, not the payment.
Rate bands and lending rules on this page were last reviewed on 2026-10-23 and are indicative, not offers. The arithmetic is produced by the same code the calculator runs. Confirm the terms with your own lender before committing; nothing here is financial advice.