Financial Models
Interest Only Loans & Sinking Funds

Financial Models

Investments

• Simple interest formula
• Compound interest formula
• Compound interest {TI-84 Plus CE}
• Future value annuities
• Effective rates of interest
• Taxation
• Inflation
• Superannuation​​

Loans

• Reducing balance loans
• Home loans (calculations with variable rates)
• Interest only loans and sinking funds
• Comparison interest rates

Strategies to minimise interest

• Making larger repayments
• Making more frequent repayments
• Reducing the term of the loan
• Changing interest rates
• Making lump-sum payments
• ​Using an offset account​​

An interest only loan is a special type of loan where only the interest of the loan is required to be paid off each term for the duration of the loan. However at the end of the loan, the full amount borrow will still be owed. Therefore, these loans are often coupled with sinking funds which is a savings account used to save for the total amount borrowed.