Work out what your repayments could be on a $500,000 mortgage using Savvy’s calculator and compare home loan offers here.
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There are so many different factors which can impact your home loan repayments, so it’s important to have an idea of what these may be to help inform you of what your home loan may end up costing. If you’re in the market for a $500,000 mortgage, find out what your repayments may be and start comparing from a range of options with Savvy today.
When it comes to your home loan repayments, there are several key variables which will impact the cost of your mortgage. It’s important to understand all of these before signing onto your home loan, as employing just one of the following factors can save you a meaningful amount over the life of your home loan. These include:
Interest rate
Of course, the interest rate you’re offered on your home loan will play a big role in shaping your $500,000 home loan repayment. Even minor differences in the mortgage rate can have a significant impact on what you end up paying overall. For example, a $500,000 home loan with monthly repayments over 30 years would cost $2,108.02 for each instalment (and $258,887 overall) at a 3% p.a. interest rate. Cutting that rate down to 2% p.a. instead would not only reduce monthly repayments to $1,848.10, but also total interest to $165,315. In many ways, interest holds the key to your mortgage savings.
Loan term
The longer your loan term, the more interest and fees you’ll pay. For this reason, any opportunity you can take to shorten your term, whether that be via additional repayments or a shorter initial term, should be seized upon. For instance, a $500,000 mortgage with monthly repayments at 2.5% p.a. over 30 years would produce instalments of $1,975.60 and cost $211,218 in interest overall. However, while a 25-year term would increase repayments to $2,243.08, the interest you’d pay over the life of the loan would fall dramatically to $172,925, representing a total saving of almost $40,000.
Fees
In the same way as interest, mortgage fees can shape a significant portion of the cost of your $500,000 loan repayments. This is represented in part by a loan’s comparison rate, which serves as a more representative reflection of the cost of a mortgage by combining rates and fees into one percentage figure. Even reducing a monthly fee from $15 to $5 will add up to an incredible saving of $3,600 over the life of the loan. You should familiarise yourself with home loan fees by comparing mortgage offers with Savvy, enabling you to make a more confident choice on which offer is most affordable.
Repayment frequency
While you may not think it, how often you make repayments will actually impact not only what you pay per instalment but also your overall loan cost. Because fortnightly repayments represent the equivalent of 13 months’ worth each year (26 fortnights compared to 12 months), you’ll actually save a great deal overall by selecting this schedule. A $500,000 loan with monthly repayments over 30 years at 2.75% p.a. would cost $2,041.21 and $234,834 in interest, but a fortnightly instalment would set you back $1,020.60 every two weeks and only $204,933 in overall interest, a saving of almost $30,000.
Interest type
Whether you’ve chosen to go with a variable home loan interest rate or a fixed rate will impact the consistency of cost for your $500,000 home loan. Variable interest rates are left open to fluctuation, meaning the amount you actually have to repay may vary from month to month. While this places you in an ideal position to capitalise on rate drops, it also leaves you vulnerable to increases in your lender’s interest. Fixed rates give you the luxury of certainty when it comes to how much you’ll be setting aside each month, but also may end up costing more due to locking you out of rate decreases.
One of the best things you can do to prepare yourself for the purchase of your home and signing of your mortgage contract is to thoroughly compare as many mortgage offers as you can. You can do this with Savvy, where we break down offers from our lenders to show you the most crucial features of each offer.
Many lenders offer introductory interest rates as a means of enticing customers to choose them to borrow from, which can often be highly lucrative. These initial low repayments can result in a noticeable saving overall, although it’s crucial to ensure that their revert rate is also competitive at the end of the initial introductory period.
Many mortgages come with an attached offset account these days, which can be a great help for reducing the cost of your home loan. While you may not see an immediate difference in your repayments, offsetting your mortgage with these funds will mean you’re paying a lesser portion of interest sooner.
Saving up more money from the outset will reduce your overall loan debt considerably, thus slashing your required repayments for each month. A $500,000 home loan over 30 years at 3.5% would come with monthly instalments of $2,245.22 but adding $50,000 to your initial deposit will result in a monthly reduction of over $200 and overall saving of more than $30,000.
Quantum Savvy Pty Ltd (ABN 78 660 493 194) trades as Savvy and operates as an Authorised Credit Representative 541339 of Australian Credit Licence 414426 (AFAS Group Pty Ltd, ABN 12 134 138 686). We are one of Australia’s leading financial comparison sites and have been helping Australians make savvy decisions when it comes to their money for over a decade.
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For more information about us and how we conduct our business, you can read our privacy policy and terms of use.
© Copyright 2024 Quantum Savvy Pty Ltd T/as Savvy. All Rights Reserved.
© Copyright 2024 Quantum Savvy Pty Ltd T/as Savvy. All Rights Reserved.
Quantum Savvy Pty Ltd (ABN 78 660 493 194) trades as Savvy and operates as an Authorised Credit Representative 541339 of Australian Credit Licence 414426 (AFAS Group Pty Ltd, ABN 12 134 138 686). We are one of Australia’s leading financial comparison sites and have been helping Australians make savvy decisions when it comes to their money for over a decade.
We’re partnered with lenders, insurers and other financial institutions who compensate us for business initiated through our website. We earn a commission each time a customer chooses or buys a product advertised on our site, which you can find out more about here, as well as in our credit guide for asset finance. It’s also crucial to read the terms and conditions, Product Disclosure Statement (PDS) or credit guide of our partners before signing up for your chosen product. However, the compensation we receive doesn’t impact the content written and published on our website, as our writing team exercises full editorial independence.
For more information about us and how we conduct our business, you can read our privacy policy and terms of use.
