Committing to a home loan also means that you commit to making regular minimum loan interest repayments, and any fees attached, on the total amount of money you have borrowed.

Use our monthly repayment calculator to find out what your estimated home loan repayments are based on your desired loan. 

What Is A Home Loan Calculator?

A home loan calculator is a tool that can help you understand the cost of your current or potential mortgage repayments. Also called a mortgage repayment calculator, by using this calculator you’ll be able to:

  • Identify low interest rates: find an affordable interest rate and compare against loans with higher interest rates to calculate potential savings. 
  • Identify your loan amount: through inputting your personal income and total saved deposit, you can calculate the amount possible for you to borrow and comfortably repay. 
  • Identify interest total repayments: clarify what exactly you’ll have to pay back in total over the lifetime of your loan by breaking down interest repayments based on your loan term. 

What Is A Repayment

A repayment is an amount of money that you pay back to the institution that you took a home loan from. Usually paid on a monthly basis, loans may consist only of interest repayments only or require principal and interest repayments. 

Your specific home loan contract will detail repayment due dates and minimum amounts required. 

How Can A Repayment Calculator Help?

Taking out a home loan may be one of the most expensive financial decisions you can make over your lifetime. Buying a home is an important dream for many Australians and loan repayments may equate to a high percentage of your cost of living. Therefore, understanding the finer details of repayments are crucial to your and your family’s financial security.

The main benefit of the home loan calculator is to find out the mortgage amount you can take out and see what repayments will be so you have defined parameters on the type of property you can realistically purchase. This will shape your final decision you make when committing to a home loan. Whether you intend to use it to find a new loan that suits your situation best or as a comparison tool when looking to refinance your loan to get a better deal. 

By adjusting different variables on the calculator, such as interest rates, loan terms and payment frequencies, it can help you understand how these factors impact your loan long term and what potential benefit they may have in paying off your home loan sooner. 

When Should I Use A Home Loan Calculator?

Using a home loan calculator is advisable at all stages of your home loan lifecycle, such as:

  • Before you look at properties to buy: get an estimation of what a loan amount a mortgage lender may offer you and understand the reality of your real estate budget. 
  • After you research the property market: to define boundaries around the property you could potentially afford based on the amount of loan you may possibly be lent.
  • For home loan pre-approval: grasp what repayments you could afford and how this could change based on fluctuating interest rates.
  • When making a purchase offer: to help determine how property values and real estate prices can impact your home loans LVR and LMI.
  • For comparison when refinancing: through identifying more suitable interest rates that may mean that you make less repayments over the life of the loan, bettering your financial situation.

Things You Should Know

Home loan repayments are determined by many external variables that cannot be completely covered by the home loan calculator. Information provided by the calculator is a best estimate only based on the input details provided and does not include added information that can alter payments such as fees and charges or variable rates. Interest rates are subject to change and this will affect the repayments made over the course of your loan. 

A home loan calculator does not substitute professional financial advice, prescribed to your unique situation, but it will help give you a clearer picture when identifying home loan suitability. To get the most accurate picture of your home loan, get in touch.

If you need help calculating your stamp duty, split fixed variable and fixed interest loan repayments, loan comparison, home loan offset and other associated costs, we have other calculators that can assist.

How To Calculate Your Mortgage Repayments

Prior to using the home loan calculator, it’s helpful to have an understanding of the below three key areas. Where exact figures aren’t known, use your best estimate:

  • Amount you plan to borrow: known as your total or principal loan amount
  • Interest rate: use a default or advertised interest rate 
  • Length of loan term: choice of how many years your loan will take to repay 

For example, if the current real estate market dictates that the property you’d like to purchase is $750,000 and you have a 20% deposit of $150,000 as a down payment, then the principal amount needed as a home loan is $600,000. That home loan amount combined with an interest rate of 4.25% over 30 years, equates to a required monthly repayment of $2,951.64 based on our home loan calculator.

How Do I Use This Repayment Calculator?

To estimate your mortgage repayments based on the type of home loan you have or are considering,  input the following information our home loan repayment calculator: 

  • Total or principle loan amount
  • Specific interest rate
  • Loan term or total years of the life of your loan
  • Repayment fee and frequency, e.g. weekly, fortnightly, monthly, annually

Play with the result you get at first calculation by modifying areas such as loan term and repayment frequency to determine whether there are any areas which could be adjusted to help you save more money over the course of your loan. 

What Costs Are Included In The Home Loan Repayment?

The total cost of your home loan repayment usually consists of the principal amount, interest on the loan and any additional fees. Based on your own personal circumstances, this also may include LMI if you were not able to make a 20% down payment when obtaining your home loan.  

Can My Monthly Loan Repayment Amount Increase?

External factors can affect the interest rate paid on your home loan. If your home loan is on a variable interest rate and it increases over your loan period, you should expect to make higher repayments. Payments will also vary based on the home loan repayments types. Keep reading below to understand the different types.

What Are The Different Home Loan Repayment Options?

How you choose to make repayments is dependent on what is right for you. The pros and cons are worth calculating to understand what repayment option you choose to make now and how that affects the future cost of your home loan.

Principal And Interest

The total amount borrowed for a home loan is referred to as the principal. Starting out as a fixed amount and decreasing with each repayment, the principal must be repaid over the life of the loan.

  • Default method of home loan repayment
  • Each repayment comprises of a percentage of the principal + interest + fees
  • Interest rates are lower than interest only repayments
  • Monthly repayments will be higher than interest only repayments
  • Each principal repayment moves you further towards owning your home outright

Interest-Only Repayments

This type of loan repayment offers flexibility as it will lower your repayment amounts temporarily. This may benefit your financial situation, lifestyle or in the case your home loan is for an investment property, you could claim higher tax deductions for an interim if you opt to make interest only repayments. 

  • Each repayment comprises of interest + fees only
  • Interest is charged at a higher rate than principal and interest loans, as essentially the principal will have to be repaid in a shorter period of time
  • Total amount of interest paid over the life of the loan will be higher 
  • Only available for an agreed time period, then reverts back to principal and interest repayments
  • Equity will build slower, which could be a disadvantage if the value of your home does not increase if you choose to sell

Tips To Pay Off Your Home Loan Faster

The freedom of being mortgage free is the goal behind paying off your home loan faster. It may grant you a more secure financial future and offer greater flexibility in what you choose to spend your money on. Speak to your lender to understand what is right for you.

1. Increase your repayments

Making extra payments will chip away at the outstanding principal amount and decrease interest charged in the long run. Cross check with your lender prior to making any changes as there may be limits.

2. Raise your repayment frequency 

Paying your loan off weekly or fortnightly increases the number of payments you make each year, affecting the rate of future interest as the principal amount decreases. 

3. Compare your home loan options 

Find out the options you have to refinance your home loan and make a habit to do this annually. Home loans perpetually evolve, so the potential to find something that reduces the overall payment of your loan is high.

4. Link your home loan to an offset account

Essentially an additional account joined to your home loan, a mortgage offset account primarily reduces the potential interest paid. The balance in your offset account is countered by the balance of your mortgage account, lowering the total rate of which your interest is calculated. 

5. Understand fixed and variable interest rates

Do your research to identify which type of interest rate can work for you. Fixed rates are usually for a set period of time based on the market interest rate at the time of signing your home loan. Variable interest rates are generally more flexible and allow you to make extra repayments but they can fluctuate and increase due to external factors. There’s also an option of combining fixed and variable rates to certain portions of your loan. 

6. Create healthy financial habits 

Short term sacrifices can lead to long term gains. Identify where your money is going and create a budget that realistically increases the amount you can save. Make a rule to add those savings and any additional windfalls like a salary bonus or tax return to your outstanding mortgage. Only use redraws on your home loan as a last resort. 

Frequently Asked Questions 

How is interest calculated?

The interest on your home loan is calculated daily on the total amount of the loan unpaid, this will be charged to your loan account monthly. Interest is additional to the total loan amount, and is charged by the lender as a cost for borrowing money.

For example, if the balance of your loan is $150,000 and you are on a fixed interest rate of 4.25%, you would calculate your interest by $150,000 x 4.25% divided by 365 days of a year. This equals a daily interest rate of $17.46.

What Loan Term Should I Use?

Your loan term is defined by your unique financial and living situation. As a guide, most lenders in Australia provide home loans over a 30 year period, with the maximum loan term at 40 years. Ultimately, the faster you repay your loan, the less interest you will have to pay. Note that if you have a shorter loan term, you will also have higher home loan repayments.

What is LVR?

LVR is an abbreviation of ‘Loan to Value Ratio’, and is an important factor that could influence your borrowing power. As a calculation, it is the percentage of the value of the property cost based on the amount you are borrowing. For example, an LVR of 80% on a property that costs $750,000 means that your home loan will be $600,000, as that is 80% of the total property value.

As a guide, the lower your LVR, the less risk the lender has when providing you with options to finance your home. Potentially, this could also mean better home loan offers.

What is LMI?

LMI, or ‘Lenders Mortgage Insurance’ is there to safeguard the lender when you borrow more that 80% of the total value of the property you choose to buy. If your LVR is high, expect to also pay higher for your LMI.

Generally, home deposits request a 20% down payment. Where that is not possible, LMI is a required cost in case you may default on the home loan and the property is sold to recuperate costs at a shortfall.

What Is A Comparison Rate?

Home loans with the lowest interest rates don’t automatically qualify as your best home loan option. This is why understanding your comparison rate is important, as interest plus the loan amount does not equal the entire repayment costs you will incur.

Comparison rates are calculated at a big picture level, using the interest rate, fees and charges, as well as repayment frequency, principal amount and loan term. They are legally required of lenders to be shown to customers seeking home loans in Australia, and provide an accurate total cost of the loan over its determined lifetime. In simple terms, they can help to reveal which home loan is best for your budget and financial future. 

Visit our home loan comparison calculator to compare home loan options.

Is It Better To Make Weekly, Fortnightly Or Monthly Repayments?

Your frequency of home loan repayments can influence the total amount of interest payable and the overall time it takes to pay off your mortgage. The cost of loan repayments are based on monthly repayment calculations, for which fortnightly costs are determined by halving the monthly amount. Furthermore, a year consists of 12 months, but it also has 26 fortnights. Hence, if you choose to repay your loan fortnightly instead of monthly, you will pay the equivalent of 13 monthly repayments per year. Your frequency of repayments will also help you save on interest of the loan as this amount is calculated based on your daily balance of debt.

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