What is a mortgage calculator?

What is a mortgage calculator?

A mortgage calculator is an online tool that shows you how much you’d have to repay based on different home loan scenarios.

A typical mortgage calculator will allow you to play around with a range of variables, including:

  • Interest rate – e.g. 4 per cent
  • Loan term – e.g. 30 years
  • Loan size – e.g. $350,000
  • Repayment frequency – monthly, fortnightly or weekly
  • Repayment type – principal and interest or interest-only

Imagine you took out a home loan with these characteristics:

Here’s how your repayments would look under different interest rate scenarios:

Interest rate Monthly repayments Total repayments
4.00% $1,671 $601,542
5.00% $1,879 $676,393
6.00% $2,098 $755,432
7.00% $2,329 $838,280
8.00% $2,568 $924,539

You might be able to afford to repay a $350,000 loan at 4.00 per cent, but would you be able to repay it if interest rates rose to, say, 8.00 per cent?

A mortgage calculator can help you answer that question, and in turn help you decide whether or not you can afford a loan.

Of course, interest rates are just one variable. Loan term is another. If you decided to repay your hypothetical home loan over 25 years rather than 30, you’d save tens of thousands of dollars over the life of the loan, according to the calculator:

Interest rate Monthly repayments Total repayments Savings
4.00% $1,847 $554,228 $47,314
5.00% $2,046 $613,818 $62,575
6.00% $2,255 $676,515 $78,917
7.00% $2,474 $742,117 $96,163
8.00% $2,701 $810,405 $114,134

If you’re wondering why you save money paying off the loan sooner, it’s because you reduce the principal faster, which in turn means you get charged less interest.

Imagine you were thinking about buying a more expensive property, which would mean borrowing $400,000 rather than $350,000. Again, you could use a mortgage calculator to work out whether that was feasible.

Here’s how your repayments would look based on different interest rates and loan terms:

30-year loan

Interest rate Monthly repayments Increase on $350k Total repayments Increase on $350k
4.00% $1,910 $239 $687,478 $85,936
5.00% $2,147 $268 $773,021 $96,628
6.00% $2,398 $300 $863,352 $107,920
7.00% $2,661 $332 $958,036 $119,756
8.00% $2,935 $367 $1,056,619 $132,080

25-year loan

Interest rate Monthly repayments Increase on $350k Total repayments Increase on $350k
4.00% $2,111 $264 $633,404 $79,176
5.00% $2,338 $292 $701,508 $87,690
6.00% $2,577 $322 $773,160 $96,645
7.00% $2,827 $353 $848,133 $106,016
8.00% $3,087 $386 $926,178 $115,773

Did you find this helpful? Why not share this article?



Money Health Newsletter

Subscribe for news, tips and expert opinions to help you make smarter financial decisions

By signing up, you agree to the ratecity.com.au Privacy & Cookies Policy and Terms of Use, Disclaimer & Privacy Policy


Learn more about home loans

Interest Rate

Your current home loan interest rate. To accurately calculate how much you could save, an accurate interest figure is required. If you are not certain, check your bank statement or log into your mortgage account.

How will Real Time Ratings help me find a new home loan?

The home loan market is complex. With almost 4,000 different loans on offer, it’s becoming increasingly difficult to work out which loans work for you.

That’s where Real Time RatingsTM can help. Our system automatically filters out loans that don’t fit your requirements and ranks the remaining loans based on your individual loan requirements and preferences.

Best of all, the ratings are calculated in real time so you know you’re getting the most current information.

Do other comparison sites offer the same service?

Real Time RatingsTM is the only online system that ranks the home loan market based on your personal borrowing preferences. Until now, home loans have been rated based on outdated data. Our system is unique because it reacts to changes as soon as we update our database.

Monthly Repayment

Your current monthly home loan repayment. To accurately calculate how much you could save, an accurate payment figure is required. If you are not certain, check your bank statement.

What do mortgage brokers do?

Mortgage brokers are finance professionals who help borrowers organise home loans with lenders. As such, they act as middlemen between borrowers and lenders.

While bank staff recommend home loan products only from their own employer, brokers are independent, so they can recommend products from a range of institutions.

Brokers need to be accredited with a particular lender to be able to work with that lender. A typical broker will be accredited with anywhere from 10 to 30 lenders – the big four banks, as well as a range of smaller banks, credit unions and non-bank lenders.

As a general rule, brokers don’t charge consumers for their services; instead, they receive commissions from lenders whenever they place a borrower with that institution.

What is a fixed home loan?

A fixed rate home loan is a loan where the interest rate is set for a certain amount of time, usually between one and 15 years. The advantage of a fixed rate is that you know exactly how much your repayments will be for the duration of the fixed term. There are some disadvantages to fixing that you need to be aware of. Some products won’t let you make extra repayments, or offer tools such as an offset account to help you reduce your interest, while others will charge a significant break fee if you decide to terminate the loan before the fixed period finishes.

What is the flexibility score?

Today’s home loans often try to lure borrowers with a range of flexible features, including offset accounts, redraw facilities, repayment frequency options, repayment holidays, split loan options and portability. Real Time Ratings™ weights each of these features based on popularity and gives loans a ‘flexibility score’ based on how much they cater to borrowers’ needs over time. The aim is to give a higher score to loans which give borrowers more features and options.

What is a valuation and valuation fee?

A valuation is an assessment of what your home is worth, calculated by a professional valuer. A valuation report is typically required whenever a property is bought, sold or refinanced. The valuation fee is paid to cover the cost of preparing a valuation report.

What is the amortisation period?

Popularly known as the loan term, the amortisation period is the time over which the borrower must pay back both the loan’s principal and interest. It is usually determined during the application approval process.

How does a redraw facility work?

A redraw facility attached to your loan allows you to borrow back any additional repayments that you have already paid on your loan. This can be a beneficial feature because, by paying down the principal with additional repayments, you will be charged less interest. However you will still be able to access the extra money when needed.

Why should you trust Real Time Ratings?

Real Time Ratings™ was conceived by a team of data experts who have been analysing trends and behaviour in the home loan market for more than a decade. It was designed purely to meet the evolving needs of home loan customers who wish to merge low cost with flexible features quickly. We believe it fills a glaring gap in the market by frequently re-rating loan products based on the changes lenders make daily.

Real Time Ratings™ is a new idea and will change over time to match the frequently-evolving demands of the market. Some things won’t change though – it will always rate all relevent products in our database and will not be influenced by advertising.

If you have any feedback about Real Time Ratings™, please get in touch.

Mortgage Calculator, Loan Amount

How much you intend to borrow. 

How much are repayments on a $250K mortgage?

The exact repayment amount for a $250,000 mortgage will be determined by several factors including your deposit size, interest rate and the type of loan. It is best to use a mortgage calculator to determine your actual repayment size.

For example, the monthly repayments on a $250,000 loan with a 5 per cent interest rate over 30 years will be $1342. For a loan of $300,000 on the same rate and loan term, the monthly repayments will be $1610 and for a $500,000 loan, the monthly repayments will be $2684.

What is appreciation or depreciation of property?

The increase or decrease in the value of a property due to factors including inflation, demand and political stability.