My husband and I have recently bought our first home. Initially, the journey towards our dream felt very overwhelming, mainly due to the need for fairly extensive research of both the property & finance markets in Sydney. One of the first steps we'd recommend to anybody looking to buy their first home in Australia is to find a comprehensive mortgage calculator. Mortgage calculators are generally available on most finance providers? websites. The mortgage calculator gives you an idea on your maximum borrowing capacity, which will determine the property price range you should look for. Amongst other handy hints, the mortgage calculator also gives you a rough idea on the total interest you're likely to pay during the life of the loan and the result is a great motivator to make as many additional repayments into the loan as possible. If you feel you will have the capacity to increase your minimum repayment rather than making irregular payments into the loan, the mortgage calculator will work out the reduced loan term based on what you can pay into the loan. The mortgage calculator will also respectively show you an approximate amount of interest you'll save by making additional repayments, which is another great motivator to pay your loan off as fast as possible.
A comprehensive mortgage calculator also gives you an option to choose between Interest Only and Principal & Interest repayments. Most lenders offer interest only periods for up to 10 years and let the loan revert to a Principal & Interest for the remaining term of the loan. The mortgage calculator should really be anybody's starting point before investing their time into property and finance research. If you don't know your maximum borrowing capacity you can't narrow your research down to your price range.
As the mortgage calculator is readily available on most lenders? websites, you can always return to the your favourite mortgage calculator once you've short listed two or three lenders you're considering for your home loan. The mortgage calculator lets you compare any two home loans at the time as they're most likely to have different interest rates, which may have a great impact on the total interest charged to your loan over the entire loan term. A comprehensive mortgage calculator is always designed by the industry professionals based on the latest average living expenses for the number of applicants and their dependants as set by independent and professional research organisations.
The mortgage calculator generally provides a fairly reasonable and trustworthy result based on the information entered into the relevant fields.
One of the most useful tools is a mortgage calculator. As a general rule a mortgage calculator is very user friendly. Establishing your borrowing capacity can be approached in a number of ways and is a relatively quick and simple process . For example, in Australia a mortgage calculator will allow you to enter your net income and your current liabilities such as a car loan or credit card debt and will then quickly give you an idea as to the amount you can borrow. The mortgage calculator will also advise your monthly instalment amount and give you the total amount of interest you will pay over the loan term (this can be a bit frightening but can also act as a good motivator for you to make as many extra repayments as possible on your mortgage!)
A good mortgage calculator will represent the payments you make in graph form as well.
Another feature of a mortgage calculator could be a comparison calculation whereby you enter your existing bank's rate and term into the mortgage calculator together with the rates and term of any proposed new lender. The mortgage calculator will show you the amount of interest you will pay under each loan ? again a graph is often provided. This type of comparison mortgage calculator is quite sophisticated in that it has provision for a number of variables. For example you may compare your existing loan which may have an initial fixed rate term for 3 years @ 8.20% reverting to a 7.75% variable rate at the end of that 3 year period with a proposed loan which may have an initial 5 year fixed period @ 7.95% reverting to a 7.65% variable rate for the remainder loan term. The mortgage calculator will calculate the fixed interest payable for the first 3 or 5 years plus the interest for the remaining term at the variable rate and give you the total interest amount that you will pay for the full loan term on each mortgage. The mortgage calculator will again summarise this in graph form and advise the amount you will save or lose by staying with your existing lender.
If you are reasonably confident of your borrowing capacity you can cross check by using a mortgage calculator and simply entering the amount you wish to borrow. The mortgage calculator will then determine your monthly repayment amount. You can then determine yourself whether you have the capacity to service the loan taking into account your net take home pay and after allowing for your living expenses and repayments on any other liabilities.
Although a mortgage calculator can give you a guide to your borrowing capacity there are other things that a lender will take into consideration when you apply for a loan. For example the number of dependent children you have will impact on your borrowing capacity.
In Australia, a mortgage calculator is a good resource and you should certainly check them out to be confident that you are on the right track in relation to your estimates on borrowing capacity.
Vicky Edema has sinced written about articles on various topics from Debts Loans, Mortgage and Finances. Vicky Edema has been the Managing Director of Austral Corporation since 1992, the company provides an easy to use. Vicky Edema's top article generates over 33100 views. to your Favourites.