Granny Flat Loan Repayment Calculator

Yes — several loan options are available for granny flat builds in Australia. The most common is a home equity loan or redraw from an existing mortgage, which lets you borrow against the equity you have built up in your property. Construction loans are also available for larger builds. Personal loans can cover smaller builds but typically carry higher interest rates. Read our full guide on granny flat finance options for a complete breakdown of each pathway.

Home loan interest rates in Australia vary by lender, loan type and borrower profile. As of 2026, the average variable home loan rate in Australia is approximately 6.5% per annum — but rates can range from around 5.5% to 8%+ depending on the lender and your financial situation. The calculator above is pre-filled with 6.5% as a starting point — adjust it to match a rate you have been quoted or are targeting.

A shorter loan term means higher monthly repayments but significantly less interest paid over the life of the loan. A longer term reduces monthly repayments, making cash flow easier — but you pay more interest overall. For a granny flat that generates rental income, many investors choose a 15–20 year term so the rental income can cover repayments comfortably while still clearing the debt within a reasonable period. Use the loan comparison table above to see the difference across 15, 20 and 30 year terms for your specific numbers.

In many cases yes — granny flat rental income can cover some or all of the loan repayments. A $130,000 granny flat financed over 20 years at 6.5% costs approximately $970 per month. A granny flat in a high-demand suburb renting at $450 per week generates $1,950 per month — more than covering the repayment. Lower-rent areas or higher build costs may not achieve the same coverage. Use our Rental Yield Calculator alongside this tool to model the full picture.

Not necessarily — if you have sufficient equity in your existing property, lenders may allow you to borrow 100% of the construction cost against that equity. A cash deposit reduces the loan amount and therefore reduces monthly repayments and total interest paid. The calculator above lets you enter any deposit amount — including zero — to see how it affects your repayments. Talk to a mortgage broker to understand your borrowing capacity based on your current equity position.

The calculator uses a standard principal-and-interest amortisation formula — the same method used by Australian banks for fixed repayment loans. Results are indicative estimates only and assume a fixed interest rate over the full loan term with no fees, offset accounts or rate changes. Actual repayments will vary by lender and may include establishment fees, monthly account fees and lender’s mortgage insurance. Always confirm your exact repayments with your lender or mortgage broker before committing.