How home loan calculators can help you

Whether you’re buying your first home, refinancing your mortgage, or looking to buy an investment property, it’s usually a good idea to make some calculations to work out if you’re making the best choice for your financial situation.

Fortunately, there a wide range of mortgage calculators available to help answer your questions, such as:

How much will my home loan repayments cost? 

One of the most common uses for a home loan calculator is to work out what effect home loan repayments might have on your household budget.

To calculate your home loan repayments, enter your home loan amount, the loan term, the interest rate, and the repayment frequency (e.g. monthly, fortnightly, or weekly). This can give you an estimate of this mortgage’s ongoing cost, as well as the total overall cost including interest charges. By entering more details about the type of home loan you’re looking for, you may be able to more easily compare different home loan offers with the calculator’s results.

You could also use this calculator in reverse to get an estimate of your borrowing power.

Simply enter the size of the repayment you’d like to make, along with a repayment frequency and interest rate, and the calculator will estimate a mortgage size, assuming that you’ll be paying it back over a 30-year term.

How much can I borrow?

While you can estimate a maximum loan size based on the repayments you’d like to pay, this may not be the same as the maximum amount a bank or mortgage lender may be willing to lend you.

This is because lenders look at your income, expenses, and other factors before approving a home loan application, to help ensure you can comfortable afford the repayments, with minimal risk of ending up in financial stress if your circumstances were to change (such as if you lost your job or had to pay for new expenses).

Entering some basic details about your financial situation in to the How Much Can I Borrow calculator can give you an idea of how much money a lender may be willing to offer you to buy a property, taking income buffers and average floor rates into account.

How much could I save by switching home loans?

Once you’ve been paying your mortgage for some time and have had a chance to build up some equity in the property, you may start thinking about refinancing. Switching your home loan to another lender could let you benefit from a lower interest rate, so you could save money on your repayments.

Simply enter your current interest rate and home loan amount into the Switch and Save calculator, and you can find how much you may be able to save in interest charges by switching to an alternative lender.

But there are also other reasons to consider refinancing, such as paying off your home loan faster, or accessing the equity in your property. A Refinance Calculator can help you estimate how much faster you may be able to pay off a mortgage by switching, or the new cost of monthly repayments if you refinance to get cash out of your home.

How much will I pay in stamp duty?

Transfer duty, also known as stamp duty, is a government tax on property purchases that is charged whenever a property’s title changes hands. Depending on your state or territory and the value of the property you’re buying, it can be a significant expense to factor into your budget.

A Stamp Duty Calculator can help you estimate how much duty you may need to pay when you buy a property, simply by entering some details of where the property is located, its value, and what type of buyer you are. The more information you can include, the more accurate the results may be – for example, first home buyers may get to enjoy waive or discounted stamp duty in many states and territories.

How much will Lender’s Mortgage Insurance cost me?

Lender’s Mortgage Insurance (LMI) is charged when a mortgage has a loan to value ratio (LVR) of more than 8-0 per cent. In other words, if your deposit is less than 20 per cent of the property value, you’ll likely have to pay for LMI to help cover the lender’s financial risk in case you default on your repayments. Remember that LMI protects the lender, not the borrower, and the lower your deposit, the more you may have to pay.

By entering the value of the property and the size of your home loan into the LMI Calculator, you can estimate how much extra you may need to budget for.

Is a mortgage going to stress my finances?

Home loan repayments can take up a significant chunk of your household budget. There’s a chance that if your personal financial situation were to change (such as if you added a child to your family, or lost your job), you could struggle to afford your mortgage payments. This strain on your personal finances is called mortgage stress.

Different lenders define mortgage stress differently, though a common benchmark is that if more than one third of your income is going towards servicing your mortgage repayments, you may be at risk of mortgage stress. You can estimate your risk of mortgage stress by entering your income and monthly mortgage repayments into the Mortgage Stress Calculator.

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