How to use a mortgage calculator

How to use a mortgage calculator

Last updated: 26 July 2016

Thinking about a home loan and not sure how much you can borrow? A mortgage calculator can be a good first step.


When you use our mortgage calculator, you’ll be asked to enter the following details:

  • Your annual income (and if you have a partner, their income)
  • The number of dependents you have e.g. children
  • An estimate of your annual expenses
  • Your monthly credit card repayment, car loan repayment and any other payments
  • The interest rate you’re expecting to pay for the duration of the loan
  • The loan term – i.e. the duration of the loan.


With these details, the mortgage calculator will estimate the maximum amount you could borrow and the applicable monthly repayments.

The mortgage calculator will often display a graph to visually show you how your loan balance decreases over the term of your loan and also includes a breakdown of the principal and interest components of your loan.

Example of results from Credit Savvy’s mortgage calculator


However, there are a few important things to keep in mind when using a mortgage calculator:



Even though many mortgage calculators have an interest rate buffer built into the calculations when you’re asked to enter an interest rate, make sure you consider what would happen if the interest rate goes up significantly. Interest rates in Australia have been relatively low the past few years but when you’re considering a loan term of 25 or 30 years, a lot can change. Make sure you’ll be able to service your loan repayments even if the interest rate goes up or your circumstances change.



A mortgage calculator is usually unable to take into account the fees and extra costs involved when taking out a mortgage. For example, you may have an application fee associated with your home loan, or a settlement processing fee to process the settlement of your loan. You could also have ongoing fees such as an annual package fee, so it’s important to check the terms and conditions before taking out a particular home loan. Mortgage calculators often do not include Lenders Mortgage Insurance (LMI), which is typically paid on loans where the deposit is less than 20% of the property purchase price.

Mortgage calculators also don’t take into account fees associated with purchasing a home. Examples of such fees include (but are not limited to) stamp duty, inspection fees and legal fees. It’s a good idea to familiarise yourself with typical upfront costs of buying a home.



While the amount you can borrow and the interest rate are important factors when choosing a home loan, don’t underestimate the other features that a home loan can offer. Examples of such features include the option to make extra repayments over the life of the loan, the ability to redraw any extra funds you have deposited and the option of having a 100% offset account.



A mortgage calculator is a great starting point in your home loan search but it is important to remember that the results are only an indication of your borrowing capacity and potential repayments. Each provider might have a different way of calculating what they are prepared to lend you and of course different products and interest rates that may impact this.

At Credit Savvy we always recommend doing as much research into products and providers as you can and to always read the product guides before making any decisions.


Why not get started today and try out the Credit Savvy mortgage calculator now?