Home Loan Calculator
Whether you're investing, refinancing or buying your first home, calculate much you can afford with RateCity's home loan calculator.
Based on your details, you can compare the following home loans
How to use a home loan calculator
A home loan calculator can help you to:
- Find a low rate: Work out the lowest interest rates you can afford, and how much you could save compared to a higher rate.
- Find out how much you can borrow: Use your income and saved deposit to work out how much you can afford to borrow and comfortably repay.
- Find out how much you’ll pay in interest: Break down the total cost of your loan, and see how much total interest you’ll pay when you buy a property.
Keep in mind that a mortgage calculator does not take every aspect of your personal situation into account, and is not a substitute for professional financial advice.
What type of home loan calculator should I use when I’m looking to buy?
Much like home loans, mortgage calculators aren’t one-size-fits-all, and there are many options to choose from.
If you’re starting out, you may want to use a borrowing power calculator, which will help you determine how much money you can expect to take out ahead of pre-approval. You can use this number to gauge how much you think you can afford, and apply that as you search for a home.
A broker may be able to help maximise your borrowing power, but this is a solid first step to working out what you can spend.
If you’re closer to buying, a Lender’s Mortgage Insurance calculator will help provide a gauge on how much LMI you might be up for on a property, while a Stamp Duty Calculator assists in understanding any stamp duty you may have to pay on a property.
After this, consider the calculator on this page, the standard Home Loan Calculator, which provides a more firm understanding of what you can expect to pay for a new home. Home loan calculators, such as RateCity’s mortgage calculator, provide a way of working out which loans match your needs, ordered by variables that matter most to you.
What other costs should I consider?
While a home loan calculator can assist with answers on mortgage costs, there are many factors that can affect the cost of your home loan, as well as other expenses associated with buying property. These include:
- Type of property: Are you buying a new or existing dwelling? Home loans for new off-the-plan developments may cost more, as the value of the property is not yet known.
- Type of buyer: Are you an investor? An owner-occupier? A first-time buyer? Many banks consider some types of borrowers riskier than others, and may charge them higher interest rates.
- Deposit size: Is your deposit less than 20 per cent of the property value? If so, you may have to pay Lender’s Mortgage Insurance (LMI).
- The state or territory where you’re buying: Costs like stamp duty vary from state to state.
- Additional costs: You may be able to add extra expenses to your home loan, such as to cover the cost of moving, renovating or refurnishing a property. However, this may mean paying more in interest.
What if interest rates change?
While you can use a mortgage calculator to work out the cost of a home loan, these calculations are unlikely to remain accurate for your home loan’s full term. Variable interest rates may rise or fall, making your mortgage payments cost more or less. Even a fixed interest rate is only temporary, and will revert to a variable rate upon expiry.
One way to estimate if you can afford a mortgage is to calculate the repayments if interest rates were to suddenly increase by two percentage points, and work out if these higher mortgage payments could still fit into your household budget.
How much can I borrow?
Before most banks will approve a home loan application, they’ll want to be confident you can comfortably afford the loan without ending up in mortgage stress. This is when a sudden change in your circumstances, such as an interest rate increase or losing your job, could leave you struggling to afford your home loan.
Different banks measure mortgage stress differently, One common benchmark is that if more than one third of your household income would go towards repayments on a home loan, you may be in mortgage stress.
Before you apply for a mortgage, look at your income and expenses to work out how well you could manage the repayments.
What about extra repayments?
Many home loans let you make extra repayments, to reduce the amount you owe on the loan faster. This can help to reduce your interest charges, so your loan can cost less and you can get out of debt sooner.
A home loan calculator can help you estimate how much you could save in interest charges by regularly making extra repayments on your home loan, or by paying a lump sum onto your mortgage.
Keep in mind that some lenders limit how many extra repayments you can make on a home loan, or may charge fees for making extra repayments. Be sure to check the terms and conditions.
What about interest-only home loans?
Paying only the interest charges on your home loan may be appealing if you want to reduce the impact on your monthly household budget. However, while you’re making interest-only repayments, you’re not reducing the loan principal you owe. This means your loan will take longer to pay off, and may cost you more after it reverts to principal and interest repayments.
You can use a mortgage calculator to work out how much an interest-only loan may save you in the short term, or cost you in the long term, and decide if an interest-only loan may be right for you.
What’s the next step after using a mortgage calculator?
After the mortgage repayment calculator has told you how much you could expect to pay for your home loan, the next step is to compare the range of home loans that are available on the market, and to consider their interest rates, fees, features and other benefits.
Once you find a loan that may match your needs, you can contact the lender directly to make an application. If you’re having trouble working out which mortgage offer may be right for you, a mortgage broker may be able to provide personal financial advice.
What type of home loan calculator should I use if I want to refinance?
Once you’ve been paying a mortgage for a while, and have had a chance to build up some equity in the property, it may be worth comparing your home loan options to see if you want to refinance your loan. Switching to a lender offering a lower home loan interest rate could mean paying less money from month to month, leaving more room in your household budget.
You may want to consider using a Mortgage Stress calculator to work out whether you’re comfortable in your current home loan, and whether you can do better. If you come out in the green, you may be fine, but yellow and red suggest a high level of stress, and you may be able to consider switching home loan lenders.
Customers looking to refinance may want to use the Home Loan Refinance Calculator, which like a mortgage calculator provides options for customers thinking of switching banks and lenders, and shows potential savings. Remember that switching to a mortgage with a longer loan term could end up costing you more in total, even if the interest rate is lower, so consider your options carefully.
Senior Financial Writer
Mark Bristow is a senior financial writer for RateCity and an experienced analyst, researcher, and producer. Working for over ten years, Mark previously wrote and researched commercial real estate at CoreLogic, and has seen articles published at Lifehacker and Business Insider, among others. Most recently, Mark has joined RateCity working across finance as a whole. Whatever the topic, Mark’s goal is always to provide simple solutions to complex problems.