Most people in Australia, while keen to purchase a first home or investment property, are often unsure about how much they are able to borrow. A mortgage calculator is a quick and easy way to determine your borrowing capacity in Australia. A mortgage calculator will generally be quite easy to use and will provide you with the amount you can borrow and the monthly interest compounding and monthly payments against that loan amount.
The other benefit of a mortgage calculator is its ability to determine how much faster you can repay your loan if you are in a position to either:
(i) make a regular additional payment – for example you might increase the minimum repayment required under your mortgage by $100 per month. The mortgage calculator will show you how this can significantly reduce the term of your loan.
(ii) make a one-off lump sum payment – for example you may receive a bonus from your employer, an inheritance or gift of money and decide to apply this to reduce your outstanding loan balance. What impact will this have on the loan term? A mortgage calculator will give you the answer.
A mortgage calculator offers further advantages in that if it can provide you with calculations for different loan terms. In Australia, if you want to ascertain how much you would need to pay, to pay off your loan in say 15 years as opposed to the standard 25 or 30 year loan term, then you can easily change the term of the loan in the mortgage calculator and within seconds the mortgage calculator will provide you with the revised monthly instalment.
Recently, borrowers in Australia have been concerned about the effect that a rise in interest rates might have on their ability to make their loan repayments. Again the mortgage calculator allows you to enter a number of interest rates and calculates the amount by which your monthly instalment will increase. For example if you settle your loan when interest rates are at 7.75% p.a. what will be the impact of a Reserve Bank increase of 0.25%? By entering the rate as 8% in the mortgage calculator you will quickly ascertain how much more you will be required to pay each month.
A good mortgage calculator will also enable you to enter the frequency of your loan repayment and again show you how this will reduce your loan term. For example while most loan repayments in Australia are on a monthly basis you can choose to repay your loan on a weekly of fortnightly basis. A mortgage calculator will calculate the amount of the weekly or fortnightly payment for you.
By exploring the various fields within a mortgage calculator you can quickly determine how much you can borrow in Australia, the impact that additional repayments or rate changes will have on your loan and the effect of changing the frequency of your loan repayments.
A good mortgage calculator can provide you with a significant amount of information by which you can not only determine how much you can borrow in Australia but also how you can budget to repay your home loan faster.
Vicky Edema has been the Managing Director of Austral Mortgage Corporation since 1992, a company offering competitive
mortgage rates and also providing
free
mortgage calculator
