Are you trying to calculate what the cost of your monthly mortgage repayments will be, or the total interest you’ll pay over the life of your mortgage? Sounds like you could use a mortgage calculator.
Our mortgage calculator (or home loan repayment calculator) might be able to help you better manage your mortgage in the years ahead.
To use this online mortgage calculator, enter your:
- Expected loan amount
- Interest rate
- Home loan term
- Payment frequency and
- Choose a loan type of either principal and interest or interest only.
The calculator will show estimated monthly repayments based on the information that you have entered, as well as the total estimated amount of interest that you would pay should you reach the end of your loan term (and the interest rate remains the same).
You can display these results as a graph or a table, showing your total loan cost, as well as how long it will take to pay off the principal (if you choose this type of loan).
Please note: The calculations do not take into account any fees you may be charged. The results provided by this calculator are an estimate only, and should not be relied on for the purpose of making a decision in relation to a loan. Interest rates and other costs can change over time, affecting the total cost of the loan. Consider whether you need financial advice from a qualified adviser.
How do you use a mortgage calculator?
Mortgage calculators and home loan repayments calculators can be handy tools to use when trying to estimate how much you will need to pay each month to cover your mortgage.
Keeping in mind that these types of calculators typically only give general estimates, here’s how one could be used in different scenarios:
Buying a house
If you are trying to decide how much you might be able to afford to borrow, you could use a mortgage calculator to work out how much your monthly repayments could be on different loan amounts. This could also help you to decide what type of property you can afford to buy, and where.
If you already have a household budget sorted, know how much you can spend each month on a mortgage and know how much you want to borrow, this calculator could help you decide what loan conditions might suit your circumstances. As a hypothetical example, if one lender was offering an attractive interest rate but on a longer-term loan, you could use the calculator to work out if that was a better deal than another lender offering the same interest rate but a shorter term.
Refinancing an existing mortgage
Home loan interest rates are regularly changing, so it could pay to shop around to find the best deal. One way to check if a new loan would help you to save compared to your current one could be to use a mortgage calculator. You can use it to enter the rates, term and amount of your current home loan, and then note down the results. Then, you could compare rates (such as via Canstar’s home loan comparison tables), and enter the details of your preferred alternative home loan offering, and compare the results. It’s good to keep in mind that the calculator will only give an estimate of repayments on the interest rate stated, and does not take into account fees or changes in interest rates over time.
You could also work out what the difference might be to the total interest you pay and your monthly repayments if you altered the term of the loan. This could help you to plan your financial future.
If you are considering swapping from a principal and interest home loan to an interest-only mortgage, or vice versa, a loan calculator can help you see what difference this could make to your monthly repayments. It’s important to note the difference between the two types of loans before signing on the dotted line.
Want to change your home loan repayment frequency
If you are wondering what changing the frequency of repayments might do to your total loan balance over time, a mortgage calculator can help you to work this out.
Frequently asked questions
How do you calculate mortgage repayments?
Calculating mortgage repayments can either be done via a calculator, like the one above, manually via an equation, or via a spreadsheet program. Either way, you will need to know what your principal is (how much you will be borrowing), the interest rate, and the term (length) of your loan. Equations of this kind will only produce an estimate of your repayments, as they are not able to consider the full picture, such as possible interest rate changes over time.
How is interest calculated on a home loan?
Interest on a home loan is generally calculated on a daily basis on the outstanding balance of the loan. How much interest you end up paying on your loan will depend on a range of factors. The calculation typically involves multiplying your loan balance by your interest rate and dividing this by 365 days (some lenders divide by 366 days during leap years). This is your daily interest charge. This is then usually multiplied by the number of days in the month to work out your monthly interest amount, assuming you make your repayments monthly.
How are mortgage principal and interest calculated?
Canstar’s mortgage repayments calculator, above, can give a rough visual reference of how a principal and interest loan works. In a principal and interest loan, the principal part of a loan is the amount borrowed. Interest is how much money (excluding fees) the lender charges the borrower to have that loan and repay it back over time. When you opt for a principal and interest loan, you are entering into an agreement with the lender whereby you are paying off both the amount borrowed and the interest charged simultaneously. Over time as you make your repayments, the principal part of the loan will begin to get smaller, which, in turn, means the amount of interest you pay is theoretically reduced, too.
With a home loan, the lender charges interest based on an annual percentage rate. Using that rate, interest is typically calculated each day on the loan’s current balance and the interest amount is divided by 365 to give the daily interest amount. As interest is usually charged monthly, the daily interest amounts for the month are added together and that total is added to your loan balance. At the start of a loan, typically, a higher proportion of your repayments goes towards interest, so the principal reduces more slowly than when nearing the end of the loan.
What home loan rates are available?
Home loans can offer a variable or fixed interest rate, or you may be able to split your loan so a portion of your loan has a fixed rate and the rest has a variable rate. With fixed-rate home loans, your interest rate is locked in for a certain period of time (usually one to five years). With variable rate home loans, your interest rate can rise or fall throughout your loan term, depending on a number of factors such as the Reserve Bank’s official cash rate.
Your home loan interest rate can make a big difference to the total amount of interest you pay, with the size of your home loan being another key factor.
Explore: Current interest rates on home loans
How much do I need for a home deposit?
A deposit is a percentage of the purchase price or value of the home you hope to buy and is money you typically need to save upfront. Before you can work out how much deposit you need – or if the savings you have already are enough – it’s a good idea to work out how much you can actually borrow. Then it’s a matter of working out how much of a deposit you would need to have saved, if you were to take on a home loan to buy a property in your desired location. Bear in mind that you may need to pay for lenders mortgage insurance if your deposit is smaller than 20% of the property’s value.
Does my credit score count when applying for a home loan?
If you are applying for a loan, or thinking of refinancing, one thing to consider could be checking on your credit score. Your income, occupation and age are all factors that could potentially affect your ability to secure a home loan. However, your credit score can also be an important factor your lender may take into consideration when evaluating your loan application. For this reason, it may be a good idea to refresh your knowledge of what your current credit score is, and think about whether you could be doing more to maintain or improve it.
How long to pay off my mortgage with extra payments: Calculator
Making extra payments into your mortgage could help to pay it off faster, as it could cut down the time it takes to pay off the loan and potentially save you on interest in the long run. However, some lenders have caps on how much you can pay back in a specified time frame, particularly when it comes to fixed-rate loans, so it is a good idea to discuss this with your lender. If you are considering ways to speed up the repayment of your loan, you may consider using Canstar’s Extra Home Loan Repayments Calculator.
It may also be a good idea to explore whether or not having an offset account or redraw facility attached to your loan could help you to speed up your loan repayment.
Explore: What types of home loans are there?
What other home loan calculators could I use?
Canstar has a range of other calculators available that could help you to plan your finances.
If you are buying a home and want an estimate of how much you might be able to borrow, you could try the Home Loan Borrowing Power Calculator.
Finally, you may be considering a split loan – which is where part of the loan is set for repayments on a fixed-rate basis, and the rest is on a variable rate. In this case, our Split Loan Calculator may be of assistance.
About the author of this page
This report was written by Canstar’s Editor, Bruce Pitchers. Bruce began his career writing about pop culture, and spent a decade in sports journalism. More recently, he’s applied his editing and writing skills to the world of finance and property. Prior to Canstar, he worked as a freelancer, including for The Australian Financial Review, the NZ Financial Markets Authority, and for real estate companies on both sides of the Tasman.