Australian home loan and property tools

Work Out Your Home Loan Budget and Repayments

Explore home loan repayments, borrowing capacity, purchase costs, loan-to-value ratios, refinancing scenarios and home equity using Australian dollars and Australian mortgage terminology.

Calculator results are general illustrations only. They are not loan approvals, property valuations, financial advice, legal advice or lender quotes. Each lender applies its own assessment rules, valuation methods and product conditions.

Planning an Australian home loan

A practical mortgage estimate begins with the property price, deposit, loan amount, interest rate and proposed loan term. It should also allow for expenses that sit outside the loan, including transfer duty, conveyancing, inspections, moving costs and an emergency reserve.

Australian borrowers can choose from variable, fixed and split home loans. A lender will normally review verified income, regular living expenses, existing debts and other financial commitments before deciding how much it is prepared to lend.

The size of the deposit affects the loan-to-value ratio (LVR). A higher LVR may influence the available interest rate, lending conditions and whether lenders mortgage insurance (LMI) is required. Transfer duty, first-home assistance and concessions also vary between Australian states and territories.

A practical way to compare home loan options

1

Separate the deposit from purchase expenses

The deposit contributes to the property price, but other expenses may need to be paid from your own funds. Allow for transfer duty, conveyancing, building and pest inspections, lender fees, moving expenses and a reserve for unexpected costs.

2

Use an equivalent loan term

A replacement loan can appear more affordable when its balance is spread over additional years. Compare alternatives over a consistent period and examine the repayment, total interest and remaining balance at the end of that period.

3

Test a higher interest rate

Calculate the repayment again using a higher rate. This can show how much room the household budget has if a variable rate rises or a fixed-rate period ends at a more expensive rate.

4

Consider features as well as the rate

Review offset accounts, redraw access, extra repayment rules, annual fees and fixed-rate break costs. A useful feature may justify a cost, but only when it suits the way the loan will actually be managed.

How principal-and-interest repayments work

A principal-and-interest repayment covers the interest charged for the period and repays part of the amount borrowed. During the early years of a long mortgage, interest commonly accounts for a larger portion of each repayment. As the principal balance falls, more of the repayment can go towards reducing the debt.

The repayment produced by a calculator assumes that the entered rate and other settings remain unchanged. An actual variable-rate loan can change over time, and lender fees may not be included unless they are entered separately.

Affordability involves more than the monthly repayment

A repayment may fit the current budget without leaving enough room for council rates, home insurance, strata fees, utilities, maintenance or unexpected repairs. Buyers may also need funds for purchase expenses and a reserve for emergencies.

Lenders conduct their own assessment using verified income, living expenses, existing liabilities, credit history and product rules. They may test whether the borrower could manage repayments at a higher assessment rate rather than relying only on the advertised rate.

Deposit, LVR and home equity

The loan-to-value ratio compares the amount borrowed with the property value accepted by the lender. For example, borrowing $480,000 against a property valued at $600,000 produces an LVR of 80%.

A larger deposit normally means a smaller loan and a lower LVR. MoneySmart explains that borrowers with an LVR above 80% may need to pay lenders mortgage insurance. This insurance protects the lender rather than the borrower.

See MoneySmart’s guidance on saving for a house deposit and understanding LVR .

For an existing owner, gross home equity is the property value minus the loans secured against it. Equity is not automatically available as cash. A lender still needs to accept the property valuation and approve any additional borrowing.

Fixed, variable and split home loans

A fixed-rate loan provides repayment certainty during the fixed period, but it may restrict extra repayments and can involve a break cost if the loan is refinanced or repaid early. A variable-rate loan can provide greater flexibility, although the repayment may rise when the lender changes its rate.

A split loan combines fixed and variable portions. This can provide some repayment certainty while retaining selected variable-loan features, but the two portions may have different rates, fees and conditions.

MoneySmart provides a current comparison of fixed, variable and split home loan rates .

Extra repayments, offset accounts and redraw

Extra repayments can reduce the principal sooner and may lower the interest charged over the life of the loan. Some fixed-rate products restrict additional repayments, so the contract should be checked before relying on this strategy.

An offset account is a transaction account linked to a home loan. Its balance reduces the portion of the loan on which interest is calculated. Redraw is different: it may allow a borrower to access eligible extra repayments previously made directly into the loan.

Access rules, fees and interest rates differ between products. MoneySmart explains these differences in its mortgage offset account guidance .

Refinancing without disguising the real cost

Refinancing can change the lender, interest rate, loan term and available features. A lower rate may save money, but the comparison should include discharge charges, application costs, valuation fees, possible fixed-rate break costs and the length of the replacement loan.

Restarting a mortgage with a longer term can reduce the regular repayment while keeping the borrower in debt for longer. A clear comparison examines both loans over the same number of years and checks the repayments, fees, interest paid and outstanding balance at that point.

Before changing loans, review MoneySmart’s guide to switching home loans .

Information to collect before calculating

Gather the expected purchase price or current property valuation, available deposit, existing secured debts, household income, regular expenses, other loan repayments, quoted interest rate, proposed loan term and lender fees.

Use figures from recent statements and written loan quotes where possible. A calculation based on complete, current information provides a more useful planning estimate than one based only on the advertised interest rate.

Frequently asked questions

Questions about Australian mortgage calculators

Does a mortgage calculator tell me how much a bank will lend

No. It can estimate repayments from the values entered, but it cannot complete a lender’s assessment of income, expenses, debts, credit history, property security or lending policy.

Does the estimated repayment include every cost of owning a home

Usually not. Council rates, strata fees, insurance, utilities, repairs and maintenance generally need to be budgeted separately. Purchase costs may also sit outside the loan.

Why is the lender’s repayment different from my calculation

The lender may use a different interest rate, compounding method, repayment frequency, first-payment date, fee treatment or loan balance. Compare the calculator assumptions with the lender’s written schedule.

Will a larger deposit always improve my application

A larger deposit reduces the required loan and LVR, which may lower costs or broaden the available loan options. Approval still depends on the lender’s complete assessment of the borrower and property.

Can making extra mortgage repayments reduce interest

Generally, reducing principal earlier lowers the amount on which future interest is calculated. Check whether the loan limits extra repayments or charges a fee, especially during a fixed-rate period.

How can refinancing lower my repayment but still cost more

The repayment may fall because the debt is spread over a longer period. The additional years of interest and refinancing fees can produce a higher total cost even when the new interest rate is lower.

Should I calculate repayments at more than one interest rate

Yes. Testing the current rate alongside one or more higher rates can show how sensitive the household budget is to future rate increases.