Home loan repayments on $1,200,000 (Australia)

What $1.2m costs at November 2026 rates

The Reserve Bank has lifted the cash rate five times in 2026, from 3.60% to 4.85%, most recently on 3 November. The big four passed the September rise on in full from 9 October, and Canstar estimated the average owner-occupier variable rate at 6.49% once they caught up; if the November rise is passed on in full, that average becomes about 6.74%. Sharper lenders still advertise from 5.89% and the average across every advertised product is higher at 6.75%. On $1,200,000, each 0.25-point step moves the 30-year repayment by about $198 a month, and the gap between the cheapest and the average rate is worth $467 a month.

Sydney and inner-Melbourne territory. A $1.2m loan usually means a $1,500,000 purchase with 20% down — well above the average new loan of $731,000. Lenders will look closely at your debt-to-income ratio: $1,200,000 at APRA’s DTI threshold of 6 implies at least $200,000 of gross household income before a loan stops counting as “high DTI”, and banks may only write 20% of new owner-occupier loans above that line.

25 vs 30 years: total interest on $1,200,000

The term is a trade-off between monthly comfort and lifetime cost. At 6.49% a 30-year term costs $518 a month less than 25 years, but total interest climbs from $1,228,497 to $1,527,693 — an extra $299,197. A 20-year term would cost $845 a month more than 25 years and save another $282,941.

Principal & interest vs interest-only on $1.2m

Interest-only (IO) periods of up to five years are mainly used by investors and by owner-occupiers managing a temporary squeeze, such as parental leave. At 6.49% the IO repayment on $1,200,000 is $6,490 a month, $1,087 less than principal and interest. The catch: after five years you still owe all $1,200,000, and the loan has only 25 years left to clear it, so the repayment jumps to $8,095 — $1,605 a month more than during the IO period, and $518 more than if you had paid P&I from day one. Over the life of the loan you pay about $90,203 extra interest, before any IO rate premium (RBA data show investor interest-only loans priced roughly 0.2 points above P&I in August 2026).

Monthly vs fortnightly vs weekly repayments on $1,200,000

Fortnightly pay cycles make fortnightly repayments popular in Australia. If you choose a true fortnightly repayment the lender works out $3,495 — the 30-year loan simply split into 26 smaller payments a year — and it saves only a little interest. The trick is paying half the monthly amount, $3,788, every fortnight: 26 halves equal 13 monthly payments a year, so the loan is gone in about 24 years 2 months instead of 30 years and you save about $351,331 of interest. Paying a quarter of the monthly amount ($1,894) weekly works almost the same: about 24 years 1 month and $352,811 saved.

“Fortnightly” and “weekly” here are the lender-calculated amounts; see the fortnightly vs monthly guide for the half-monthly method.

How an offset account changes a $1.2m loan

An offset account is a transaction account linked to the loan: the balance is subtracted before interest is charged, so $50,000 of savings against $1,200,000 means you pay interest on $1,150,000 — while the repayment stays at $7,577, and the extra goes straight off the principal. Because the saving equals your loan rate and is not taxed, it is worth more than a savings account paying 6.49% before tax to anyone who pays income tax.

Balance held constant for the whole loan; in practice it rises and falls with your pay cycle. Offset loans often carry a package fee or a slightly higher rate — see offset accounts explained.

What income do you need for a $1,200,000 mortgage?

Australian lenders do not use a fixed income multiple. They test whether you could still pay at the assessment rate — the loan rate plus APRA’s 3-point serviceability buffer, 9.49% here — after your declared living expenses (or the Household Expenditure Measure, if higher), other debts and credit-card limits. At 9.49% the 30-year repayment on $1,200,000 would be $10,081 a month, $2,505 more than you would actually pay today.

• 30% rule of thumb: keeping the real repayment ($7,577) under 30% of gross pay needs about $303,100 a year — a single earner on that salary takes home about $16,230 a month in 2026-27, so the repayment is 47% of take-home. A couple on $151,500 each takes home $18,561 together (41%).
• APRA debt-to-income limit: since 1 February 2026 banks may write only 20% of new owner-occupier loans at a DTI of 6 or more. $1,200,000 ÷ 6 = $200,000 of gross income before this loan alone becomes “high DTI”.

Payslip detail: $155,000 salary after tax. For the full picture see how much can I borrow.

Deposit, LMI and the 5% Deposit Scheme

With a 20% deposit — $300,000 on a $1,500,000 home — no lenders mortgage insurance applies. Borrow more than 80% of the value and the lender passes on an LMI premium, which is usually added to the loan. The table uses one lender’s indicative premium table (full-doc, May 2026); your quote will differ, and most states also charge stamp duty on the premium.

5% Deposit Scheme: with a 5% deposit, $1,200,000 buys about $1,263,158. That is under the First Home Guarantee cap in NSW (Sydney + Newcastle, Lake Macquarie, Illawarra, Central Coast, Coffs Harbour–Grafton, Mid North Coast, Richmond–Tweed) — so an eligible first home buyer could skip LMI entirely and save the premium. See LMI explained and the First Home Guarantee 2026 rules.

Fun equivalent: $1.2m in flat whites

Neighbouring loan amounts

All at the 6.49% average variable rate.

Tips to cut the cost of a $1.2m home loan

FAQ

What are the repayments on a $1,200,000 home loan?

At the 6.49% average owner-occupier variable rate (Canstar, after the September 2026 RBA rise, before lenders pass on the November rise) a $1,200,000 principal-and-interest loan costs about $7,577 a month over 30 years or $8,095 over 25 years. Fortnightly over 30 years it is $3,495; weekly $1,747.

How much income do I need for a $1.2m home loan?

As a rule of thumb, keeping the $7,577 monthly repayment to 30% of gross income needs about $303,100 a year. Banks assess at 9.49% (the rate plus APRA’s 3-point buffer), where the repayment would be $10,081 a month, and subtract your living costs and other debts. To stay below a debt-to-income ratio of 6 you would need at least $200,000 of gross income if this is your only debt.

How much interest will I pay on $1,200,000?

About $1,527,693 over 30 years or $1,228,497 over 25 years at 6.49%, if the rate never changed. Paying half the monthly repayment every fortnight cuts the 30-year interest by about $351,331.

What are interest-only repayments on $1,200,000?

$6,490 a month at 6.49%. If you take 5 years interest-only on a 30-year loan, repayments then jump to $8,095 for the remaining 25 years, and total interest rises to about $1,617,897 versus $1,527,693 on principal and interest. Lenders usually charge a higher rate for interest-only.

How much is LMI on a $1.2m loan?

Indicative LMI tables usually stop at $1 million, so lenders quote LMI on a $1,200,000 loan case by case and may cap the loan-to-value ratio. With a 20% deposit ($300,000) no LMI applies.

Can I use the 5% Deposit Scheme for a $1.2m loan?

A $1,200,000 loan with a 5% deposit buys about $1,263,158, which is within the First Home Guarantee price cap in: NSW (Sydney + Newcastle, Lake Macquarie, Illawarra, Central Coast, Coffs Harbour–Grafton, Mid North Coast, Richmond–Tweed). Under the scheme there is no LMI, no income cap and unlimited places (from 1 October 2025).

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Assumptions & sources

• RBA cash rate target 4.85%: raised 0.25 points on 3 November 2026, effective 4 November (the Monetary Policy Board voted 6–3). It was the fifth rise of 2026, after February, March, May and September. The Board’s next decision is at 2:30pm AEDT on Tuesday 8 December 2026.
• Average owner-occupier variable rate (P&I) 6.49%: Canstar estimate once the September rise was passed on (29 September 2026), in line with RBA Table F6 — new owner-occupier variable loans averaged 6.23% in August 2026, before the rise. Canstar’s average advertised rate across its whole database was 6.75% (13 October 2026) and the lowest variable rate was 5.89% (20 October 2026). As of 3 November no big-four bank had announced how it would pass on the November rise; passed on in full, it lifts the average to about 6.74%.
• Fixed rates: big-four 1–2 year fixed rates ranged from 6.49% (ANZ) to 6.81% (NAB 2-year) in October 2026; the lowest fixed rate on Canstar was 5.79% (1-year).
• APRA serviceability buffer: 3 percentage points above the loan rate (kept unchanged in APRA’s May 2026 review). From 1 February 2026 no more than 20% of a bank’s new owner-occupier lending (and separately investor lending) may be at a debt-to-income ratio of 6 or more.
• LMI: indicative full-doc premiums from one lender’s table published by Home Loan Experts (updated 18 May 2026); insurers price individually and state stamp duty on the premium may apply (none in NSW).
• 5% Deposit Scheme (First Home Guarantee): Housing Australia rules from 1 October 2025 — unlimited places, no income caps; Darwin cap raised to $750,000 from 1 July 2026.
• Repayments use standard amortisation (monthly, fortnightly or weekly compounding to match the payment) with the rate held constant for the whole term; real loans calculate interest daily and rates change.