THE MORTGAGE CALCULATOR

What is it?

A mortgage calculator calculates helps you understand if you can afford a home loan, what monthly payments you’ll need to make and whether the property is worth it or not. It can also do things like help you understand how much interest you will pay and how much of the actual loan you will pay off.

What information does it need?

It will need things like:

-           How much you want to borrow

-           How much interest you will pay (depending on the bank)

-           How long you will pay this loan off for (for example, 15 years or 30 years)

-           How much you need to pay up front

-           Any extra things that you might need to pay such as tax or insurance

Why should I use one?

The most obvious as mentioned above, is that it will help you understand if you can afford to purchase a property. It will also help you understand how much you will need to pay every month so that you can plan ahead. For example, if your monthly payment is $1,000 and you get paid $3,000 per month, you know that you will have $2,000 for expenses such as grocery shopping and bills. Another reason to use a mortgage calculator is because you can compare the different TYPES of loans, such as short term loans VS long term loans and which would work better for you. Or fixed-interest loans VS variable-interest loans.

What else can I do with a mortgage calculator?

Experiment with it! Play around with different types of scenarios and test out what would be manageable for you and your budget. A lot of mortgage calculators also allow you to add in things like taxes and insurances if you know roughly what you would need to pay for these things. This will help you build a more realistic picture of your repayments. If you really want to go above and beyond, you can also include things like any costs for upkeeping the property or add in rough estimates of electricity/gas bills. You can also use a mortgage calculator to refinance – what does that mean? If you have a loan but want to change to another bank that has different terms, just pop it into the calculator!

What should I NOT do with a mortgage calculator?

Never underestimate the power of a banks’ interest rates. On average, interest rates change every quarter. Even a small change can drastically increase or decrease your repayments. You can use the calculator to estimate if the rates go up too much and understand how much is too much for your budget.

DON’T EVER forget adding in additional costs – WHY? Because costs add up. And if you don’t account for them you could be paying more than you think and the property may not be worth it or become unaffordable for you. This also includes account keeping fees that banks charge. This is where a broker can also help you – think of them as your very own Home Loan Wingman!

Try to avoid assuming you can borrow the maximum amount – you need to be able to account for unexpected events as well. For example, you car breaks down and you need to pay the mechanic an excessive amount of money to get it going again. Just because the bank will lend you a certain amount of money, it doesn’t mean you should take the full amount. Don’t be tricked by this - ONLY TAKE WHAT YOU WILL BE COMFORTABLE WITH.

Extra Information

A mortgage calculator is only as accurate as the information you put into it. If you want more exact numbers, it will need EXACT numbers. This is where a mortgage broker can help you!

Need more answers?

Get yourself your very own Home Loan Wing Man - Call Dion 0402 814 022