Understanding how mortgage calculators work and which to use can be difficult when there are so many different options. Mortgage calculators are also known as loan calculators, home loan calculators, or mortgage repayment calculators and are available for home loans and investment properties.
Most of the basic mortgage calculators will estimate how much you can borrow, and your monthly repayments. More advanced calculator can also give you an idea of the mortgage insurance, government fees and other variables for a more comprehensive estimate. Using the correct tool can help provide accurate and important insights.
In this post, I’ll explain
- the basics of mortgage calculators
- how to use a mortgage calculator to make important decisions
- how to choose from the many types of mortgage calculators, including Mortgage Corp’s very own All-In-One Mortgage Calculator.
What’s a mortgage calculator?
Calculating interest and principal repayments on mortgages is hard work, unless you’re very good with sums. Not only do you need to understand how interest compounding works but also how repayments over time affect the calculation of interest on a loan.
That’s why there’s a whole host of mortgage calculators available online. Mortgage calculators are automated tools which help you decide the financial consequences of a particular loan you are after.
A basic mortgage calculator will require you to enter an estimate of how much you expect to borrow, the interest rate on the loan, how often you will make repayments and the term of the loan, and then it will calculate for you:
- How much interest you are likely to pay over the life of a loan; and
- How much your repayments will be every week, fortnight or quarter (depending on the frequency you choose).
Benefits of using a mortgage calculator
Whilst the results from a mortgage calculator are estimates, they can provide valuable information to help you make better borrowing and house buying decisions. You can use the results from a mortgage calculator to:
- decide how much you want to borrow or how much deposit you need
- compare loans between lenders
- decide on the terms of your loan such as whether to make repayments more frequently or whether to go for a 25 year mortgage instead of a 30 year mortgage
- decide whether you should invest in a particular property
For example, if you wanted to borrow $300,000 to purchase an investment property that achieves rental returns of $370 per week:
- A loan over 25 years at 5%, with repayments of principal and interest, would mean weekly repayments of $404, with total interest payable of $225,708
- A loan over 30 years at 5%, with repayments of principal and interest, would mean weekly repayments of $371, with total interest payable of $279,368
If you’re more interested in reducing total interest paid, the 25 year loan would be a better option so that you can save more than $50,000 in interest. However, if a bigger concern is ensuring that your rent can cover your repayments, you might prefer the 30 year option instead, as the 25 year loan for principal and interest will have higher repayments.
Some other decisions that can flow from the results of the mortgage calculator might be:
- Deciding to look for another investment property with higher rental yield to cover the mortgage repayments
- Finding the motivation to change to a lender with a lower interest rate to reduce your expected repayments
- Deciding to save up for a deposit – you can use the mortgage calculator to help work out how much you need to save by plugging in the revised loan amount and seeing what the new repayments are likely to look like
Types Of Mortgage Calculators
Mortgage calculators range from the very basic calculators, which only consider loan amount, interest rate, repayment frequency and term of the loan, to more comprehensive calculators which can take into account additional variables such as:
- Whether you will make principal and interest, or interest only repayments
- Whether your interest rate is fixed, variable or introductory, where you can estimate future interest rates
- Showing your interest and principal balance year by year instead of on a total loan term basis
- Factoring other fees and transaction costs in your loan amount such as stamp duty, bank fees and lenders mortgage insurance
- Even providing an estimate of your borrowing power, using your existing equity values
Most mortgage calculator websites will provide the basic information but to get these extra features, you’ll normally need to find a few calculators on many different websites, rather than an all in the one mortgage calculator.
Being able to input more variables in the calculation means you can have even more information that allows you to make better financing and investing decisions. Because incomplete inputs can mean that the results from a mortgage calculator either aren’t useful or are actually misleading.
If we go back to the example above, you might think you only need to borrow $300,000 in order to secure the investment property you are after.
However, you might not have factored in common transaction costs such as:
which when combined, can easily add tens of thousands of $$$ to your loan amount.
If for example, the cost of stamp duty, lender’s mortgage insurance and solicitor’s and transfer fees totalled $20,000, suddenly you would be looking at needing to borrow $320,000 instead of $300,000:
- On a loan over 25 years at 5%, weekly repayments of principal and interest would increase from $404 to $431; and
- On a loan over 30 years at 5%, weekly repayments of principal and interest would increase from $371 to $396.
Suddenly your repayments are slightly higher and may not suit your budget!
We noticed this problem when many clients came to us complaining about these additional costs they hadn’t factored into their loan amount (or which required them to run around to many different calculators) and that online mortgage calculators tended to ‘round’ amounts.
Advanced Home Loan Repayment Calculator
In response to client feedback we developed the All-In-One Mortgage Calculator. This comprehensive mortgage calculator combines 5 calculators into 1 easy to use tool:
All In One Mortgage Calculator Includes:
Mortgage Repayment Calculator
Stamp Duty Calculator
Interest Rate Calculator
Mortgage Insurance Calculator
Legal Fees For Buying A House
This combined mortgage calculator makes it easier to estimate how much your monthly repayments are likely to be on a 30 year loan, with interest only, or interest and principal repayments, in 4 easy steps:
- Enter the price and choose the state of the property
- Enter your deposit amount
- Enter the interest rate
- Enter your other property details
The process takes less than 20 seconds and at the click of the button our calculator will estimate your monthly repayments after taking into account your estimated stamp duty, solicitor’s and transfer fees and lender’s mortgage insurance.
The All In One Mortgage Calculator will give you an estimate on the following:
- Legal costs
- Stamp duty for the new purchase
- If you’re using other property as equity
- Total loan to value ratio (LVR)
- Loan amounts
- Repayments for current and new loans
- Lenders Mortgage Insurance
- Total cost calculation
- Adjustments to your interest rate over all loans
- Total repayments for all loans
How To Use The All In One Mortgage Calculator
We know from experience that explaining mortgage information and calculations make much sense once we show you how. So we’ve created some short videos to help you get going.
Are you buying a home? Watch the Mortgage Calculator Tutorial For Home Buyers (4 minutes)
Are you buying an investment property? Watch the Mortgage Calculator Tutorial for Property Investors. (5 minutes)
It’s all about using the right tools to get the best information to help you make better decisions. Get familiar with a complete mortgage calculator and test different inputs to generate reports with different repayments. Understanding the process will help you get in a better position for your next home loan loan purchase.
If you have further questions about mortgage calculations, how to save money and assess your options, Mortgage Corp offers a free service to help you make more informed financing decisions. We can help unlock additional value by using our extensive knowledge of loan products available from our many lenders. Our consultations are obligation-free and we will work with you to develop a comprehensive loan strategy for long-term success. Get informed and book a Free Loan Strategy Session with our senior mortgage strategist Neil Carstairs.
About Mortgage Corp
Based in Mount Waverley, Mortgage Corp is the most loved mortgage broking firm in Melbourne with consistent 5 star customer reviews. Mortgage Corp specialises in helping successful professionals and property investors maximise their return and strategically structure your loan for long term investment success.
While most banks and brokers focus on merely getting you a loan, Mortgage Corp is committed to getting you a comprehensive investment result. Request a Free Loan Strategy Session with our senior mortgage strategist Neil Carstairs today!
Mortgage Broker’s service is free, why not get a good one ? Mortgage Corp consistently receives 5 star customer reviews!
About Neil Carstairs
Neil is the founder of Mortgage Corp, an active property investor and awarding winning MFAA accredited finance broker with more than 10 years’ mortgage broking experience. Currently, Neil is one of only few MFAA Certified Mentors in VIC/TAS region.
He is known for his strategic approach to investing and ability to reach fast, successful outcomes for clients where his industry peers could not. Connect with Neil on LinkedIn.