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 rateMonthly repaymentsTotal 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?

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 rateMonthly repaymentsTotal repaymentsSavings
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 rateMonthly repaymentsIncrease on \$350kTotal repaymentsIncrease 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 rateMonthly repaymentsIncrease on \$350kTotal repaymentsIncrease 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