Why does my home loan or personal loan interest vary month to month?

Interest is calculated on the daily balance of the account, and therefore the amount will vary slightly month to month. The interest charged is different due to the interest rate, the balance of the account (including any offsets), as well as the number of days in the month. As some months have more days than others, interest will either be higher or lower.

A good thing to note is that on a loan account, your due date will be the same date each month, unless this date falls on a weekend, public holiday or at the very end of a longer month. If this happens, the interest will be debited, and the principal reduced on the first following business day. This is also a contributing factor as to why the number of calculated days in a particular month may be higher or lower.


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