Australia Mortgage Calculator (with Extra Repayment)
Our Australian mortgage calculator can help you estimate your monthly mortgage repayment.
You can also key in extra monthly repayments or lump-sum payments to see how much faster you can pay off your home loan. Whether or not that’s a good idea, we’ll discuss further, and you can decide.
Enter some basic information to get started.
Using A Mortgage Calculator
What’s the purpose of a mortgage calculator?
Our Australia mortgage calculator can help you estimate your weekly, fortnightly, or monthly mortgage repayments. This calculator estimates how much you’ll pay on either principal and interest, or interest only. You can also opt to include extra repayments or lump sum payments.
How do I use the mortgage calculator?
Start by providing your property price, loan amount, loan term, interest rate, repayment frequency, and repayment type.
If you want the repayment estimate to include extra repayments or lump sum payments, you can input that information as an option. The mortgage calculator will automatically update once you click or tap away, and voila! See what your monthly repayments will look like based on the numbers you provided.
Adding different numbers to the mortgage calculator will show you how your monthly payment changes. Feel free to try out different loan terms, interest rates, extra repayments and so on to see your options.
Understanding Mortgages 101
What is a mortgage?
A mortgage is a loan from a financial institution (usually a bank) that helps you purchase a property.
When you get a mortgage, the bank pays for the cost of your property upfront. In exchange, you agree to repay the lender with interest, over a set period.
What is the loan term?
The loan term is the length of time you have to pay off the loan. The most standard loan term is the 30-year term. In Australia, the lenders will offer 30 years as standard regardless of age. 70 years old? Not a problem! So long you’re still working and can service the loan.
Should I choose a short or long loan term?
It depends on your budget and goals. A shorter-term will allow you to pay off the mortgage faster, pay less interest, and build equity quicker, but you’ll have a higher monthly payment. A longer-term will have a lower monthly payment because you’ll pay off the loan over a more extended period, but you’ll end up paying more in interest.
Most people start with a 30-year loan term for cash flow flexibility and adjust as required.
What’s an interest rate?
Interest rate is the fee you pay to your lender to borrow the money. The interest you pay is calculated on a percentage of the remaining loan amount. This percentage is the interest rate.
What determines my interest rate?
Several factors determine your interest rate, including your loan type (investment or owner occupier), loan amount, loan-to-value-ratio, repayment type, and citizenship. Interest rates are also determined by the Reserve Bank of Australia and to a lesser extent market competition.
What’s included in my mortgage repayment?
The typical monthly mortgage repayment is made up of two parts, principal, and interest, commonly known as Principal and Interest or P&I for short.
The mortgage repayment estimate you’ll get from this calculator gives you the option between P&I or Interest Only.
What is 'principal'?
This is the amount you borrow from the bank to buy your property. It’s factored into your monthly repayment and paid off throughout the life of your loan.
What is Interest Only repayment?
This is when you only pay the 'Interest' part of your mortgage repayment. You won’t be paying any of the principal, and as a result, your home loan balance will stay the same.
Interest Only loans or I/O for short are also slightly more expensive than Principal and Interest loans by about 0.20%. This is to incentivise you to pay down your mortgage.
What’s Repayment frequency?
When you get a mortgage, you’ll have the option to choose how often you’d like to pay the lender—Weekly, fortnightly, or monthly.
The standard is Monthly; however, most people will usually pick a frequency that matches their salary. If you are paid fortnightly then choosing fortnight repayment can be convenient.
Do you pay less interest if you pay Weekly or Fortnightly?
In short, yes, you do. Sometimes.
There are two reasons for this. The first reason is minor, the second is more impactful but depends on the lender.
Interest is calculated daily on your loan balance, and by paying weekly or fortnightly, you are consistently paying earlier than if you made monthly payments. You can use our mortgage calculator to see the difference by switching between the repayment frequency.
Depending on how your lender calculates fortnightly payments you may end up paying one extra month of repayments each year, and because you’re paying more off your loan, you’ll end up paying less interest.
Here is an example, assuming a $2,000 monthly repayment.
Lender 1 calculates fortnightly repayments by halving monthly repayments.
Lender 2 calculates fortnightly repayments by dividing your annual mortgage repayment by 26. E.g. 24000 / 26 = 923
In a year there are 12 months, or 26 fortnights or 52 weeks.
Now let’s calculate the total annual repayment between the two lenders.
As you can see, with Lender 1, you are paying an extra $2000 each year which is equivalent to one month’s repayment.
Nowadays, most lenders calculate fortnightly payments like Lender 2 as it’s a more accurate method.
If your priority is to reduce the amount of interest you need to pay, then consider utilising an offset transaction account. All else being equal, proper usage of an offset account will achieve the same, if not better interest-saving outcome than choosing a weekly or fortnightly repayment schedule.
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