You can use this calculator to work out your home loan repayments with different loan sizes, interest rates, loan terms and repayment options.
What interest rate should I use?
You can use the Bank Standard Variable Rate (BSVR) of the major bank, less a 0.7% discount.
As for other lenders, check their interest rates online or enquire with them and enter the interest rate accordingly.
The discount provided by them varies from banks. But, you can assume 0.7% if you have not secured a lender or a mortgage broker to confirm anything yet.
Keep in mind that our mortgage brokers can get you a higher discount on any standard interest rate.
Suppose interest rates were to increase, to determine your home loan repayments, put in an interest rate around 1.5% higher than the current rate. This increase would help you figure out if you could be able to afford the loan, if rates went up.
What loan term should I use?
Generally, most mortgages in Australia are for a 30-year term. However, you can choose any term you like even up to 40 years, which is the maximum term offered in Australia.
You must still be aware that, the shorter your term, the higher your repayments. And, the faster you pay off the loan, the less interest you will ultimately pay.
Is it better to make weekly, fortnightly or monthly repayments?
Despite what you might have heard in the media, there is no benefit to paying weekly or fortnightly instead of making monthly repayments. Some lenders divide the monthly repayment by two to determine how much you would pay if you were to make fortnightly repayments for your mortgage.
It will lead you to pay more than the true fortnightly repayments. If you make extra repayments then you will pay the loan off faster and will save money. Thus, paying fortnightly appears to give you a benefit.
Making monthly repayments and paying more than the minimum is the most effective way to save money on your mortgage. Combine this with an offset account you can easily reduce your interest expense without making a noticeable change to your lifestyle.
What does interest only mean?
If you are making interest only repayments then you are not actually paying off your home loan. You are just paying the monthly interest to the bank.
The only advantage is that you do not have to make any repayments for a while. The disadvantage is that you will not actually pay off your loan and ultimately you will pay much more in interest.
Investors often use interest only loans on their investment properties to keep their monthly commitments low and to allow them to use their spare funds to pay off their non-tax deductible debts first.
Can I make interest only payments on a weekly basis?
The majority of lenders only allow interest only repayments to be made on a monthly basis. Exceptionally few people choose to do this as there is no benefit in paying weekly or fortnightly if you are paying interest only.
How can I work out my borrowing capacity?
To do this, first determine how much you would feel comfortable repaying each month, then use a 1.5% higher rate than the current BSVR. This method can help you work out how much you could comfortably borrow without changing your lifestyle or current spending habits.
This is a simplified method of working out your borrowing capacity. However, you can also use our borrowing power calculator or our mortgage brokers can give you a more exact figure using our software.
We never recommend that you borrow to your limit as this leaves you very little surplus money to spend on holidays or to keep on standby for unforeseen circumstances.
Speak to a mortgage broker
Our mortgage brokers are here to help you apply for a loan that suits your needs. If you are trying to minimise your loan repayments or pay off your loan as quickly as possible, we can help you develop a strategy.
Please enquire online or call us on 1300 889 743 for more information.
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.