Interest. A word that brings joy to bankers everywhere ?
Interest is the cost of borrowing money. The bank gives you a certain amount of money, and you agree to pay them back, with a little extra included – that’s the interest.

How little?
Let’s say you’re borrowing $500,000 from the bank to buy that perfect house with a big yard, lots of room and the perfect kitchen (not in Sydney of course). The bank agrees to give you that $500,000 now, and you agree to pay it back over 30 years, with interest.

Assuming an interest rate of 5.20%, over 30 years, you’ll end up paying approximately $488,400 just in interest!

Loan amount: $500,000
Interest: $488,400
Total paid back over 30 years: $988,400

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