The home loan calculator below will give you an estimate of what your repayments might be for a given interest rate and loan term. You can jump straight into it, or skip ahead and read about out how you can use it to help you with your home loan decision making.
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The calculator above uses the interest rate as one of the major factors of your calculation. You can compare rates on any of our home loan pages to get an idea of what your loan repayments would be for real world interest rates. Note too that there's an inbuilt loan repayment calculator in all home loan comparison tables, and in every home loan table on finder.com.au. Simply type in your loan amount in the 'borrowing amount' box, and the loan term, and then click "calculate". An estimate of your loan repayments for different loans will be displayed in the table.
How do I calculate my home loan repayments?
Banks calculate your home loan repayment using a formula that takes into account the principal, or original amount you borrowed, your monthly interest rate and the number of payments over the life of the loan. The formula looks a bit complicated:
M = P [i(1+i)^n/ 1-(1+i)^n]
If that makes your head hurt, we’ll break it down further for you.
M = Your monthly repayment, the figure you’re trying to solve for.
P =The principal on the loan, or original amount you borrowed.
i = Your effective monthly interest rate. Remember, the rate you see advertised by the bank is an annual interest rate, so you’ll need to divide by 12 to get your monthly interest rate.
n = The total number of repayments on the loan.
Confused? It’s nothing a good scientific calculator can’t sort out. Or, you can simply use our home loan repayment calculator above to save yourself a lot of guesswork and head-scratching.
Why should you use a loan repayment calculator?
A home loan calculator is the perfect tool to help you manage your mortgage repayments and pay off your loan in time.
If you are in the market for a new home, finding the mortgage that will best suit your finances is crucial. A home loan repayment calculator can help you easily calculate the required repayments for different home loan amounts, ensuring you take up the right home loan for you in terms of affordability and suitable minimum monthly repayments.
If you currently have a mortgage, you could use the home loan repayment calculator to figure out what your new monthly repayments would be if you refinanced to a longer or shorter loan term. You would also be able to keep track of the required mortgage repayments should interest rates fluctuate during the term of your mortgage.
How to use the home loan repayment calculator
If you currently have a mortgage, a home loan repayment calculator can help you figure out how to pay off your loan sooner. New home buyers can also calculate how much they would have to pay on their mortgage and what repayment frequency they would be comfortable with depending on their current financial situation.
Using our home loan repayment calculator is simple. All you have to do is enter the following variables to calculate your monthly repayments, total interest on the loan and the total amount you would be required to pay over the term of the loan:
Loan amount. This is the amount you intend to borrow on your mortgage.
Interest rate. This rate will be determined by your mortgage provider while you are taking out the loan. If you are taking a fixed rate home loan, the rate will remain unchanged for the term of the loan, while a variable rate home loan will have fluctuating interest rates.
Loan term. This is the period within which you intend to repay your mortgage. Lenders let you choose a loan term that will suit you, which can be anywhere between 10 and 30 years.
Loan type. There are two types of home loans: ones where you make monthly interest and principal repayments, or ones where you make interest-only repayments for a given period and then start paying the principal amount. The loan type you choose will determine what your monthly repayments will be.
Repayment frequency. Your mortgage provider will inform you whether you are allowed to make monthly, fortnightly or weekly repayments.
How you can use the home loan repayment calculator
Finding out the minimum monthly repayments you would have to make on a certain mortgage can help you determine whether it is suited for you.
Our home loan repayment calculator lets you alter a range of variables to determine if a certain loan amount would be affordable to you and how long you would need to finish off your mortgage with comfortable repayments.
To help you understand how a home loan repayment calculator can help you in your home loan journey, let’s use a case study If you were to take out a mortgage of $500,000 at a rate of 5.50% p.a. for a loan term of 25 years, your minimum monthly repayments would be $3,070.44 and the mortgage would cost you $921,131 over the course of the loan term. If you paid off that same mortgage weekly, your weekly repayments would be $707.98, with your total loan repayment coming down to $920,377 (close to $800 less).
If you needed to reduce your minimum repayments due to financial difficulties, the key would be to refinance to a longer term. Let’s take the above example but alter the loan term to 30 years. Monthly repayments would then go down to $2,838.90, though the total payments on that same $500,000 mortgage would rise to $1,022,020.
With our home loan repayment calculator, you can quickly adjust your repayment frequencies, interest rate, loan term and amount to strike the perfect balance between affordable minimum repayments and a cost-effective home loan.
Common questions about loan repayments
Increasing your loan repayment frequency would be the best way to do this. Weekly or fortnightly repayments enable you to pay off the loan much faster, saving you money on total interest payments.
If you are struggling to keep up with your minimum repayments, you may be able to refinance to a longer loan term, which would effectively lower your minimum monthly repayments. You should contact your lender to discuss options.
Using a key facts sheet is the best way to get accurate information on your home loan repayments. Each lender should provide you with a key facts sheet, a document that gives you all the information you need on your mortgage payments.
As you can see from the calculator, longer loan terms can lower your repayment amount. This is because the amount you're borrowing will be spread out over a longer period of time, and therefore will only require smaller payments to pay off. The drawback to this is that the longer you have your loan, the longer you're paying interest. This in turn means that longer loan terms can actually be more expensive in the long run as you'll pay more interest. Another way to lower your repayment is to borrow less. This could mean saving up a larger deposit, or buying a cheaper property.
Each home loan repayment you make will be split between the principal, or initial amount you borrowed, and interest, or the percentage of the principal the lender charges for lending you money. When you begin repaying your home loan, the majority of your repayment will go toward interest with a smaller proportion paying down the principal. As you pay off more of the principal, the proportion of each regular payment devoted to the interest will decrease and the proportion devoted to the principal will increase. The graph accompanying the home loan repayment calculator illustrates this.
Interest is the amount the lender charges for lending you money. It's calculated on a daily basis as a percentage of the remaining principal. For a full discussion on how home loan interest is calculated, check out our guide.
Home loan interest rates behave in some ways like compound interest. Compound interest is interest added to the principal of a deposit so that the deposit earns interest on the original balance, plus the interest already earned. With a home loan, however, the principal is reducing, so the amount interest is being charged on is also shrinking. For a full discussion on how home loan interest is calculated, check out our guide.
The amount of a monthly mortgage payment will depend entirely upon the principal, or original amount borrowed, and the interest rate. If your home loan is a variable interest rate, your repayment could change from month to month. If your loan is a fixed rate, however, your repayments will remain the same.
Comparing different home loans from different mortgage brokers in Australia is the best way to ensure you get a mortgage that you can pay without too much financial strain. Use the finder.com.au home loan calculator to compare home loans from different lenders and get closer to owning a new home today.
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