How does a mortgage repayment calculator work?

Mortgage repayment calculators are great tools for working out exactly how much your home loan may cost you. This can not only help you plan your household budget, but allow you to estimate the total cost of interest charges and the overall value of your home loan. 

Whether you make monthly, fortnightly or weekly mortgage payments, each principal & interest repayment can bring you one step closer to owning your home or investment property. 

How to use a home loan repayment calculator

Every home loan repayment calculator is different, but you can typically get useful results by taking the following steps: 

1. Enter your loan amount e.g. $500,000
2. Enter your preferred interest rate e.g. 2.50%
3. Enter a loan term e.g. 30 years
4. Select a repayment frequency e.g. monthly, fortnightly, weekly

The mortgage calculator will combine all of these factors to work out the cost of your mortgage repayments, and in most cases, the total cost of your home loan, including interest charges. 

Keep in mind that these calculations are only accurate for the information entered, don’t include the cost of home loan fees and other charges, and they assume that the mortgage interest rate will remain the same over the home loan’s full term – in reality, changes to variable interest rates could affect the cost of your home loan repayments.  

Some repayment calculators offer extra options, such as:

• Including the cost of fees
• Showing the effects of making extra repayments (regularly or as a lump sum) on your loan’s total cost 
• The effects on the loan’s total cost of switching to interest-only repayments for a limited time.  

How to use a borrowing power calculator

While some borrowers already have a home loan amount in mind and use a mortgage calculator to work out if they could afford the repayments, others take the opposite approach, and want to know how much they could borrow based on the repayments they could afford to make. 

By entering your preferred repayment amount, repayment frequency and loan term into a borrowing power calculator, you can estimate the total amount you’d pay for a home loan, including principal and interest. Using this figure, and an entered interest rate, you can work out the maximum loan amount you may be able to afford.

Keep in mind that this is no guarantee that a lender will approve a mortgage application for this amount. 

Other calculators

Some of the other calculators on RateCity that a mortgage borrower could find useful include:

• How much can I borrow?: Enter your household income and expenses into this calculator to estimate the maximum loan amount a lender may approve on a home loan application.
• Switch and save calculator: Enter the details of your current home loan and find out how much you could potentially save in interest charges by switching to another home loan with a lower interest rate. 
• Stamp duty calculator: Enter the details of a property you plan to purchase to estimate the cost of stamp duty in your state or territory. 
• Refinance calculator: Work out how much money and/or time you may save by refinancing your home loan to reduce your repayments or to pay off your mortgage faster. You can also calculate the cost of refinancing to access equity in your property. 
• LMI Calculator: If you’re planning to apply for a home loan with a deposit of less than 20 per cent of the property value, find out how much extra you may have to pay in Lender’s Mortgage Insurance. 
• Mortgage stress calculator: Estimate your risk of financial stress by comparing the cost of home loan repayments to your take home income.  

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