Australian Mortgage Calculator
Calculate Your Home Loan Repayments
Australia's most comprehensive mortgage calculator. Get accurate estimates for your home loan repayments, including stamp duty, LMI, and total interest costs.
Loan Details
Your Repayments
Monthly Repayment
$0
Principal & Interest
Additional Costs (NSW)
Understanding Your Australian Home Loan
Purchasing a property is one of the most significant financial decisions you'll make in your lifetime. Our comprehensive Australian mortgage calculator helps you understand exactly what you'll be paying, including hidden costs that many first-time buyers overlook.
Whether you're a first home buyer, property investor, or looking to refinance, this calculator provides accurate estimates based on current Australian lending practices and includes all major costs such as stamp duty, Lenders Mortgage Insurance (LMI), and total interest over the loan term.
How Mortgage Calculations Work
Principal & Interest Repayments
The most common type of home loan in Australia, Principal & Interest (P&I) loans mean you pay both the principal (the amount you borrowed) and the interest each month. Your repayments are calculated using the following formula:
Where: M = Monthly payment, P = Principal loan amount, r = Monthly interest rate, n = Number of payments
With P&I loans, your early repayments are mostly interest, but as you progress through the loan term, more of your repayment goes toward reducing the principal. This is called amortization, and it means you're building equity in your property from day one.
Interest-Only Repayments
Interest-only loans are popular among property investors for tax benefits. With these loans, you only pay the interest charges each month, not the principal. This results in lower monthly repayments but means you're not reducing the loan amount. The calculation is simpler:
After the interest-only period (typically 1-5 years), the loan converts to principal & interest, and your repayments will increase significantly as you start paying down the principal over the remaining loan term.
Loan-to-Value Ratio (LVR) & Lenders Mortgage Insurance
What is LVR?
Your Loan-to-Value Ratio (LVR) is the percentage of the property's value that you're borrowing. It's calculated by dividing your loan amount by the property's value and multiplying by 100. For example, if you're buying a $800,000 property with a $160,000 deposit (20%), your loan is $640,000, giving you an LVR of 80%.
LVR Calculation:
LVR = (Loan Amount ÷ Property Value) × 100
Understanding Lenders Mortgage Insurance (LMI)
If your LVR is above 80% (deposit less than 20%), lenders in Australia typically require you to pay Lenders Mortgage Insurance. Despite its name, LMI protects the lender, not you, in case you default on your loan. This is a one-off fee that can range from a few thousand to tens of thousands of dollars, depending on your loan amount and LVR.
LMI Cost Ranges:
- • 80-85% LVR: Approximately 1% of loan amount
- • 85-90% LVR: Approximately 2% of loan amount
- • 90-95% LVR: Approximately 3% of loan amount
Tip: Saving a 20% deposit can save you thousands in LMI fees and give you access to better interest rates.
Stamp Duty in Australia
What is Stamp Duty?
Stamp duty (also called transfer duty) is a state government tax on property purchases. It's one of the largest upfront costs when buying property in Australia, and rates vary significantly between states. This calculator uses NSW rates, which are calculated on a sliding scale based on property value.
NSW Stamp Duty Rates (2024)
| Property Value | Stamp Duty Calculation |
|---|---|
| $0 - $16,000 | 1.25% of property value |
| $16,001 - $35,000 | $200 + 1.5% of value over $16,000 |
| $35,001 - $93,000 | $485 + 1.75% of value over $35,000 |
| $93,001 - $351,000 | $1,500 + 3.5% of value over $93,000 |
| $351,001 - $1,168,000 | $10,530 + 4.5% of value over $351,000 |
| Over $1,168,000 | $47,280 + 5.5% of value over $1,168,000 |
First Home Buyer Concessions:
NSW first home buyers may be eligible for stamp duty concessions or exemptions on properties valued up to $800,000 (full exemption) or $650,000-$800,000 (reduced rates). Check with Revenue NSW for current eligibility criteria.
Smart Repayment Strategies
Make Extra Repayments
One of the most powerful ways to save on interest is making extra repayments whenever possible. Even small additional payments can shave years off your loan term. For example, on a $640,000 loan at 6.5% over 30 years, paying just $100 extra per month could save you over $80,000 in interest and reduce your loan term by nearly 4 years.
Choose Weekly or Fortnightly Repayments
Switching from monthly to fortnightly repayments (half your monthly payment every two weeks) results in 26 repayments per year instead of 24 (12 months × 2). This extra payment can reduce your loan term significantly. The key is that you're making the equivalent of one extra monthly payment per year without feeling the impact as much.
Consider an Offset Account
An offset account is a transaction account linked to your home loan. The balance in this account is offset against your loan balance when calculating interest. For example, if you have a $640,000 loan and $50,000 in your offset account, you only pay interest on $590,000. This can save thousands in interest while keeping your money accessible for emergencies.
Refinance to a Better Rate
Interest rates change over time, and lenders often offer better rates to new customers than existing ones. If your current rate is significantly higher than the market rate, refinancing could save you hundreds of dollars per month. On a $640,000 loan, reducing your rate from 6.5% to 6.0% could save you approximately $200 per month ($2,400 per year).
Investment vs Owner-Occupied Loans
Owner-Occupied Loans
- Lower interest rates (typically 0.3-0.5% less than investment)
- Principal & Interest repayments build equity
- May qualify for first home buyer benefits
- No rental income required for serviceability
- Capital gains tax exemption when selling
Investment Loans
- Interest payments are tax deductible
- Interest-only options for better cash flow
- Can negative gear for tax benefits
- Rental income helps with serviceability
- Capital growth potential plus rental returns
Important: Investment loans typically have interest rates 0.3-0.5% higher than owner-occupied loans, but the tax benefits often outweigh this cost for investors in higher tax brackets. Consult with a tax professional or financial advisor to determine which option is best for your situation.
What Affects Your Interest Rate?
1. Loan-to-Value Ratio (LVR)
Lower LVR = Lower rate. Borrowers with deposits of 20% or more typically receive the best rates because they present lower risk to lenders.
2. Property Type
Houses generally attract lower rates than apartments. Investment properties have higher rates than owner-occupied homes. Rural properties may face premium rates due to lower liquidity.
3. Employment & Income
Stable employment and higher income can qualify you for better rates. PAYG employees typically get better rates than self-employed borrowers, who may face additional documentation requirements.
4. Credit Score
A higher credit score (750+) can unlock premium rates. Lenders view applicants with strong credit history as lower risk. Late payments or defaults can significantly impact the rates you're offered.
5. Loan Features
Basic variable loans typically have the lowest rates. Adding features like offset accounts, redraw facilities, or fixing your rate may increase the base rate by 0.1-0.3%.
6. Reserve Bank Cash Rate
The RBA cash rate influences all lending rates in Australia. When the RBA raises rates to combat inflation, mortgage rates typically follow. Variable loans are directly affected, while fixed loans are locked in for the fixed term.
Fixed vs Variable Rate Loans
Variable Rate Loans
Rate can decrease when RBA cuts rates
More flexibility with extra repayments
Access to offset accounts and redraw facilities
No break fees if you refinance or sell
Rate can increase with RBA rate rises
Uncertain future repayments make budgeting harder
Fixed Rate Loans
Predictable repayments for budgeting
Protected from rate increases during fixed period
Good for first-time buyers who want certainty
Can lock in low rates if timing is right
Can't benefit if rates decrease
Limited extra repayments (usually capped at $10-30k/year)
Break fees can be expensive if you exit early
Split Loan Strategy:
Many borrowers split their loan 50/50 or 60/40 between fixed and variable. This provides the certainty of fixed repayments on part of your loan while maintaining flexibility and potential savings on the variable portion. For example, fix $400k at 6.0% for 3 years and keep $400k variable at 6.5% with an offset account.
Common Mortgage Mistakes to Avoid
1. Not Shopping Around for Rates
Many borrowers stick with their bank without comparing rates. A difference of just 0.25% on a $640,000 loan costs you approximately $32,000 extra over 30 years. Always compare at least 3-5 lenders.
2. Borrowing Your Maximum Capacity
Just because you're approved for $900,000 doesn't mean you should borrow it all. Leave a buffer for rate rises, emergency funds, and lifestyle. Financial stress from over-borrowing is a leading cause of mortgage defaults.
3. Ignoring Additional Costs
Stamp duty, LMI, legal fees, building inspections, and moving costs can add $50,000+ to your purchase. Factor these into your budget from day one or risk being caught short.
4. Not Reading the Fine Print
Understand all fees: application fees, ongoing fees, early exit fees, and break costs for fixed loans. A low advertised rate might come with high fees that negate the savings.
5. Forgetting About Rate Rises
Test your budget against a 2-3% rate increase. If a rise from 6.5% to 8.5% would cause financial stress, you may be borrowing too much. The RBA's cash rate has varied from 0.1% to 4.35% in recent years.
Frequently Asked Questions
How accurate is this mortgage calculator?
This calculator provides highly accurate estimates using standard Australian mortgage formulas. However, actual repayments may vary slightly based on lender-specific calculation methods, rounding, and exact date of settlement. Always confirm final figures with your lender.
What's a good LVR for first-time buyers?
Aim for 80% LVR (20% deposit) to avoid LMI and access the best rates. However, many first home buyers start with 90-95% LVR using the First Home Loan Deposit Scheme or family guarantees. While this helps you enter the market sooner, budget for higher repayments and LMI costs.
Should I get a 25-year or 30-year loan?
A 30-year loan has lower monthly repayments, making it easier to manage cash flow, especially for first-time buyers. However, you'll pay significantly more interest. A 25-year loan saves interest but requires higher repayments. Consider taking a 30-year loan but making extra repayments when possible – this gives you flexibility during tight months.
When should I choose interest-only repayments?
Interest-only loans are primarily for investors seeking tax benefits and better cash flow. They're rarely suitable for owner-occupiers unless you have a specific short-term strategy. Remember, you're not building equity during the interest-only period, and repayments will increase significantly when it converts to P&I.
How much can I borrow on my salary?
Most lenders use a rough guide of 6-7 times your annual income for maximum borrowing capacity. However, this depends heavily on your expenses, existing debts, number of dependents, and the lender's serviceability assessment. Use a borrowing calculator or speak with a mortgage broker for an accurate assessment.
What's the difference between comparison rate and interest rate?
The interest rate is what you pay on the loan amount. The comparison rate includes the interest rate plus most fees and charges (like application fees and ongoing fees) averaged over the loan term. Always check the comparison rate when comparing loans – a loan with a low interest rate but high fees might actually cost more than one with a slightly higher interest rate and lower fees.
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