Before diving into the most popular mortgage calculators used in Australia, let's have a better understanding of the specific terms and the benefits mortgage calculators bring you.
A mortgage is a type of loan where real estate is used as collateral. It is typically used to finance your home or an investment property, so you don't need to pay the entire amount upfront.
The borrower then pays back the loan, with interest and principal, over a period of time through a series of ‘repayments’. The lender is usually listed on the title of the property until the borrower repays the entire loan.
Mortgage repayments consist of principal and interest. The principal is the amount borrowed from the lender to buy the property. The interest is the cost of borrowing the money.
A mortgage calculator is a great pre-move tool to help you figure out how much house you can afford. You can play with variables like mortgage length and interest rate to compare how much your monthly loan payment can change.
But mortgage calculators, also known as house payment calculators, are limited. They can estimate your monthly payment, but there are other housing costs they don’t include that could impact your monthly budget.
As long as you’re aware of their limitations, they are a useful tool to help you determine your price range and calculate your loan payment before you start house shopping.
Buying a house will probably be the most important investment you’ll make.
Use a house payment calculator as a research tool before house hunting. It will help you set your price range and determine how much house you can afford based on your monthly income.
Some mortgage calculators will even tell you how much income you need to earn to qualify for a home loan.
These figures will help you decide if you can afford your target home price. Knowing how much of your monthly household budget you can realistically spend on your dream house is a smart and responsible start toward your financial goals.
A mortgage calculator makes complicated amortization calculations in an instant.
They calculate the monthly principal (the amount you borrowed and you’re paying back) and interest payments (the cost of borrowing the money) over the life of the mortgage.
But to use one correctly, you will need to accurately fill out fields in the house payment calculator with the following information:
Once you enter this information, the mortgage calculator will tell you the amount of your monthly payment, which is a total of principal and interest costs.
But mortgage calculator amounts are only as accurate as the inputs you provide. Do your research ahead of time to determine the current interest rates and be honest about how much of a down payment you can afford.
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