iSelect is the trading name of iSelect Mortgages Pty Ltd (ABN 86 148 217 181). iSelect Mortgages Pty Ltd is a credit representative (Credit Representative 400540) of Auscred Services Pty Ltd (Australian Credit Licence 442372). iSelect provides a referral to Lendi Pty Ltd ACN 611 161 856 (Lendi) who provides credit assistance. Lendi is a credit representative of Auscred Services Pty Ltd (ACN 164 638 171) (Licensee). iSelect Mortgages Pty Ltd receives a commission from the Licensee for each new customer account created and for each home loan submitted through this service.
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The suitable home loan will vary from person to person; it’s not a one-size-fits-all situation. What type of loan suits you will depend on your personal circumstances and finances.
Some variables can have a huge impact on the ongoing repayments and cost of the loan. These may include whether your loan is for an investment property or a primary residence, or whether you choose a fixed interest rate or a variable rate. These all contribute to how much you’ll be paying back each week, fortnight or month.
The Mortgage Repayment Calculator can give you an estimate of what your mortgage repayments could be and how much interest you’ll potentially pay over the course of the loan. Of course, this depends on what type of loan you take out, the interest rate, whether you make repayments fortnightly or monthly, and the length of the loan. The Mortgage Repayment Calculator lets you adjust some of those variables to see how they could affect your repayments.
It’s not difficult to use, you just need to put in some basic information and the calculator will give you a good estimate of what your repayment could be. You can then adjust a couple of these variables to see if that makes a difference to your repayments and loan term.
To get started you simply put this information into the Mortgage Repayment Calculator:
With a fixed rate loan, you lock in the interest rate at the time you take the loan, typically for a period of 1-5 years. If the variable rate rises over the period of your fixed term, your interest rate will remain the same, thus potentially saving you money. If the variable rate comes down, however, you’ll be locked into a higher rate for the fixed period of your loan.
If you do decide to refinance your fixed rate home loan during the fixed period, you will likely be charged break costs by your lender. Consider whether the benefits of refinancing will be worth the break costs. If not, it may be a good idea to wait until your fixed period ends to switch home loans.
An introductory interest rate will offer you a low ‘honeymoon rate’ for a set period of your loan, after which it will revert to the full variable rate. You need to be aware of what your new payments will likely be, and make sure you can afford them.
Be aware of fees that can sneakily reduce the competitiveness of a low interest rate. Sometimes it may make more sense to opt for a home loan with no fees and marginally higher interest rate than a low-rate home loan with high fees. Try not to get distracted by incentives and introductory offers when there is a whole loan to consider.
While an interest only loan can make your repayments lower right now, your payments will eventually rise. Plus, you’ll likely end up having the loan for a longer total period than if you were paying both principal and interest from the start.
One line of the graph indicates the principal (amount you owe) remaining each year, while the other line includes interest charges and shows the total amount left to pay on the loan. The Mortgage Repayment Calculator also shows you a yearly breakdown of the information. A table shows the interest charged each year, the principal remaining, and the total amount owing. Getting a feel for your new ongoing repayments can give you a clearer picture of your budget and help you plan your future finances accordingly.
If you’re new to the home loan game, it can be worth changing some of the variables to see how much difference small things can make to the length of your loan – particularly your repayment schedule and the initial interest rate. It’s a real eye-opener and potential money-saver.
Remember that the Mortgage Repayment Calculator results don’t include all the extra fees and charges you’ll incur while taking out a loan. It’s an estimate only and you should be aware that interest rates can change and that could influence your repayments.
So, don’t rely solely on the Mortgage Repayment Calculator results. If you’re unsure of anything, it’s always a good idea to seek professional advice before taking out your home loan.
Last updated: 26/04/2021