You can use this calculator to work out your home loan repayments with different loan sizes, interest rates, loan terms and repayment options.
How To Calculate Mortgage Repayments
To find out your mortgage repayment, simply put the following information into the calculator, and you will get the result.
Loan amount: The total amount of money you’re borrowing from the lender to purchase your property.
Loan term: The duration over which you’ll repay the loan, typically measured in years.
Interest rate: The percentage of the loan amount the lender uses to calculate interest, influencing your overall repayment amount.
Loan repayment type: The method by which you’ll repay the loan, such as principal-and-interest payments or interest-only payments.
Frequency: How often you’ll make repayments, whether monthly, fortnightly or weekly.
The formula for calculating monthly mortgage repayments is:
M = P * [r * (1 + r)^n] / [(1 + r)^n – 1],
where M is the monthly repayment amount, P is the principal (loan amount), r is the monthly interest rate (annual interest rate divided by 12), and n is the total number of monthly payments (loan term in years multiplied by 12).
What Interest Rate Should I Use?
A good starting point is to check the rates the lenders of your choice offer. Visit their websites to find their standard variable rate, which serves as a baseline for estimating your repayments.
Additionally, consider using the comparison rate, which includes fees and charges, for a more accurate picture of your monthly payments.
Tip: Consider the Buffer Rate
Assessing your ability to afford the loan involves more than just the variable rate. Lenders often apply a buffer rate to calculate your borrowing power. This buffer acts as a safety net, allowing for potential future rate increases and ensuring you can still comfortably manage repayments. By factoring in this buffer, both you and the lender are better protected against unexpected financial challenges.
What Loan Term Should I Use?
Most mortgages in Australia are for a 30-year term. However, you can choose any term you like up to 40 years, which is the maximum term offered in Australia. Be aware that the shorter your term, the higher your repayments, but also the faster you pay off the loan, the less interest you will ultimately pay.
How To Calculate Extra Mortgage Repayments
Making extra mortgage repayments can have a huge impact on your financial future by reducing your total interest paid and shortening your loan term. By paying more than the minimum required amount, you directly reduce the principal balance on your loan, which decreases the total interest you’ll pay over the life of the loan.
To see the potential benefits for yourself, try using our Extra Repayments Calculator. This allows you to input your mortgage details and explore how making additional repayments can affect your loan term and overall savings. Simply input your current mortgage balance, interest rate, desired extra repayment amount, and when you’ll start contributing to it, and the calculator will provide you with valuable insights into your financial future.
More Home Loan Calculators And Tools To Help You
FAQs: Home Loan Repayment Calculator
The average mortgage repayment for a principal-and-interest loan in Australia is $3708, for a $599,000 loan over 30 years at a 6.3% variable rate.
This calculation was made based on February 2024 data from the Australian Bureau of Statistics (ABS) and the Reserve Bank of Australia (RBA)
Please note that repayments vary based on specific loan details like interest rate and term. The additional costs like taxes and insurance aren’t included in this estimate.
If you’re looking to save on interest and pay off your loan faster, fortnightly or weekly repayments could be the way to go. This, in effect, creates one extra payment per year, shortening your loan term and saving you money compared with monthly repayments.
If you prefer to align your repayments with your pay cycle and a monthly budget, however, monthly repayments may be more suitable.
The interest rate you repay on your home loan is set by your lender, and for the most part, the interest rate your lender sets is influenced by the RBA’s Cash Rate decisions.
The higher the interest rate, the higher your home loan repayment and, potentially, the longer your amortisation period (the time it takes to pay off your loan). That’s why when the cash rate rises, the repayments on your home loan could also increase if you are on variable interest.
Use our Interest Rate Rise Calculator to estimate the impact of potential increases on your repayments.
Yes, you can pay off your home loan early. This might seem like a good plan, especially if it means you won’t have debt looming for the long term.
Keep in mind, however, some lenders might penalise you for paying off your home loan early, and there will be some fees involved.
Also, there might be some benefits to keeping your home loan account open:
You can access the equity for other purposes.
You can roll your other debts into your home loan.
Interest repayments for rental properties are tax deductible.
Making the decision to pay off your home loan early takes time and careful planning. You can read our page on paying off your mortgage early to find out if it can work for you.
Yes, you can pause your home loan repayments. This is also called taking a repayment holiday. If you’re going through financial or personal hardships that are making it difficult to make your repayments, you can ask for a repayment holiday from your lender.
Here are ways to pay off your mortgage faster:
Whenever possible, make extra repayments towards your principal.
Switch to fortnightly or weekly repayments.
Pay off your most expensive debt first.
Refinance or renegotiate to a more competitive rate.
Use an offset account.
Use a redraw facility (if available) to make lump-sum repayments while maintaining access to the funds.
For a more detailed explanation of these strategies and additional tips, see our guide on How to Pay Your Mortgage Faster.
Interest-only repayments involve paying only the interest portion of a loan for a specified period, without reducing the principal balance.
A common rule of thumb is that your mortgage repayments should not exceed 30% of your gross monthly income. This should ensure that you have enough funds left over for other essential expenses and savings. If repayments exceed 30%, the borrower could be under mortgage stress.
Let’s consider an example: If your gross monthly income is $6000, a mortgage payment of $1800 or less is within the recommended range; however, this is just a general guideline. Your individual circumstances may vary.
We’re Here To Help
The home loan repayment calculator is a helpful tool for estimating your mortgage payments, but it’s important to keep in mind that the results are based on certain assumptions and may not reflect the exact terms of your loan. That’s where the expertise of our Home Loan Experts mortgage brokers comes in.
At Home Loan Experts, we care deeply about helping you find the right interest rate for your situation from the wide range of lenders on our panel. We will do all the legwork of finding and applying for a home loan for you. Call us at 1300 889 743 or enquire online for free today.
Disclaimer
The results from this calculator should be used as a guide only.They do not constitute a loan approval, quote or an offer to lend. The calculator is not to be relied on for making a final decision on a financial product.
Code errors or delays with updating the calculator may cause your result to be inaccurate.
You should obtain a formal approval from a lender before making any offer on a property or any financial decision that relies on a new mortgage.
