How to use a home loan calculator

Written by 
Bill Tsouvalas
Bill Tsouvalas is the managing director and a key company spokesperson at Savvy. As a personal finance expert, he often shares his insights on a range of topics, being featured on leading news outlets including News Corp publications such as the Daily Telegraph and Herald Sun, Fairfax Media publications such as the Australian Financial Review, the Seven Network and more. Bill has over 15 years of experience working in the finance industry and founded Savvy in 2010 with a vision to provide affordable and accessible finance options to all Australians. He has built Savvy from a small asset finance brokerage into a financial comparison website which now attracts close to 2 million Aussies per year and was included in the BRW’s Fast 100 in 2015 as one of the fastest-growing companies in the country. He’s passionate about helping Australians make financially savvy decisions and reviews content across the brand to ensure its accuracy. You can follow Bill on LinkedIn.
Our authors
, updated on January 31st, 2022       

Fact checked

At Savvy, we are committed to providing accurate information. Our content undergoes a rigorous process of fact-checking before it is published. Learn more about our editorial policy.

If you’re thinking about purchasing a house, and you wish to apply for a home loan, but you’re not sure on the sum you can actually afford to borrow, then a home loan calculator can help you. While these online tools are only approximate indicators concerning your home loan options, still, they might come in handy in helping you to paint a bigger picture of the amount of money you can afford to borrow.

Why use a home loan calculator?

You might ask yourself, why use a home loan calculator if they are not 100% accurate? The aim here is to give yourself an indication of your monthly repayments, calculate your borrowing capacity, any interest savings and when realistically you can have your home completely paid off. Even though it’s not 100 percent precise, a home loan calculator can give you a clearer understanding concerning your future mortgage without going through the process of applying which does take some time. 

It’s simple to use

A home loan calculator is very simple to use, just follow the prompts and it will automatically calculate all the important numbers that you want to see without you being a financial accountant. A mortgage calculator requires basic, simple user input. Here are a couple of tips to remember when using a home loan or mortgage calculators.

Useful indicators

To begin with, not every single home loan calculator presents the same fields for borrowers to fill in.

You ought to take some time to determine how much you can afford to spend on a home loan and then work back from there. Starting from this point will deliver you a purchase price that wont put your finances under pressure. There are some home loan calculators that assist with determining your monthly budget but most do not. There are however online tools available that might come in handy in helping you plan your budget. 

Secondly, every home loan calculator will ask you to fill in the sum of money you wish to borrow and the amount of time in which you want to make the repayments, whether it’s 25 or 30 years. You will also be required to set the value of your interest rate and the mortgage start date.

The interest graph will allow you to visualize the way in which the interest rate might suffer alterations during the entire duration of the mortgage, and can help you to anticipate the way in which this aspect can affect your monthly repayments. Additionally, you will be offered an appreciate preview of the interest you will have to pay over the life of the loan. When filling in the interest section, it is advisable to plan ahead, in case the interest rate rises. Thus, you can anticipate the amount of money you would be required to pay extra.

Concerning payment frequency, the majority of mortgages must be paid monthly. You should know that if you wish to change the payment frequency, you have to alter the compound period as well. Opting for extra payments will imminently help you to obtain a shorter term for the loan.

Easily compare home loan options today

We compare home loan options for you so you can be assured you’re seeing the most competitive interest rates available in Australia.