Home loan calculators: pick the one that answers your question

Which home loan calculator do I need?

The home loan calculator you need is the one that matches the question you actually have. There are four common ones, and each has its own tool.

If you're buying, you'll usually want three of them, in the order shown in part 8. If you already have a loan, the repayment and refinance calculators do most of the work.

How does a borrowing power calculator work out its figure?

A borrowing power calculator works the figure out in steps, and Money Brain's shows each one. Tax and the Medicare levy come off each earner's income. Your loan and card repayments and your spending come off what's left. Then the remainder is tested at your rate plus 3 percentage points, the minimum buffer APRA expects banks to use, and the biggest loan that amount could repay over your term is the figure you see [1][7].

An illustration, not a client file: one earner on $100,000 a year, spending $3,000 a month, quoted 6% over 30 years. Tested at 9%, the figure is about $429,600. That's about $147,000 less than the same take-home pay could repay at the 6% actually charged [8]. The test is there so a loan isn't approved on a repayment you could only just meet today.

What this means for you: the buffer is one reason a borrowing figure can look lower than people expect. A calculator that leaves it out isn't more generous, it's answering a question no lender asks.

What does a repayment calculator show you?

A repayment calculator shows the repayment that clears the loan amount you type, at the rate you type, over the term you type. It's the arithmetic every lender uses, so on the same three figures it matches what a lender would quote. Money Brain's also shows the total interest, and lets you add an offset balance, an extra repayment, interest only or a rate change [7].

An illustration: $600,000 at 6.0% over 30 years is about $3,597 a month on principal and interest. Five years of interest only is $3,000 a month, then about $3,866 a month for the remaining 25 years, with about $44,700 more interest over the loan [8].

The figure is only as good as the rate you put in. Use the rate you've actually been quoted, not the comparison rate, which bundles in fees and answers a different question. See interest only against principal and interest.

How much stamp duty will I pay on top of the price?

The stamp duty you pay depends on your state, your price, and whether a concession or surcharge applies. A calculator that only asks for a price and a state has left out the step that moves the bill most: the first home concessions [3][4][5].

An illustration using Western Australia's published rates: on a $650,000 home, normal duty is $24,890, and a first home buyer pays $8,075, a saving of $16,815. Buy the same home in Queensland as a first home buyer and the duty is nil, because Queensland's nil-duty line sits at $700,000 [3][5][6][8].

Duty is usually paid at settlement, from your own money alongside your deposit, not from the loan. That's why it belongs in the sums before the deposit does. Our stamp duty tool isn't built yet; each state's revenue office runs its own calculator, and theirs is the official figure. See the stamp duty calculator page for every state.

How does a refinance calculator tell you if switching is worth it?

A refinance calculator tells you if switching is worth it by comparing your repayment now with the new one, on the years you have left, then dividing what the switch costs by the monthly saving. That gives the break-even: the month you're ahead [7].

An illustration: $500,000 owed, 22 years left, moving from 6.5% to 6.0%. The repayment falls from about $3,565 to about $3,415, a saving of about $149 a month. With $1,500 of switching costs, that pays back in 11 months [8].

What this means for you: some refinance calculators put the new loan on a fresh 30 years. On the same example that shows about $567 a month, but costs about $138,000 more in interest over the loan [8]. Ours compares on the years left, so the saving it shows is the one from the rate. A fixed-rate break cost can stretch the break-even into years, so put every cost in. See refinancing your home loan.

Which order should you use the calculators in?

If you're buying, use the calculators in this order: borrowing power first, for the top of your range; stamp duty next, because it comes out of the same savings as your deposit; then repayments, to see what the loan costs each month at a rate you've been quoted.

If you already have a loan, start with repayments to see where you stand, then the refinance calculator with a rate you've been offered. You can also ring your own lender first, quote that rate and ask whether it will reprice the loan. Ask whether any fee applies; if it matches your offer at no charge, there's no break-even to wait for.

What can't a home loan calculator tell you?

A home loan calculator can't tell you whether a lender will say yes, or which lender will lend you the most. Every calculator works on the figures you type and the assumptions it makes, ours included. A lender works on your documents, its own count of your income and spending, and a test rate higher than the one you'd pay.

A high number isn't an approval, and a low one isn't a no. Sometimes the right answer is to wait: a card to close, a pay rise to show on payslips, a few more months in a new job.

What does a broker cost you?

How a broker is paid, and the rule Money Brain holds against it, is set out in full on its own page: what a mortgage broker costs.

Your first move

You've got a number, and you know where it stops. The one question left is what a real lender would say on your real figures, and which lender would say it best: that's what Money Brain works out before anything goes to a lender.

When you're ready, the closing section below is the simplest way to start.