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If buying a property anywhere in Melbourne is on your mind, a home loan repayment calculator Melbourne is one of your most useful tools. The calculators provide a fair ballpark figure quickly and easily for what your monthly repayments might look like. To obtain maximum utility from the tool, however, it is imperative to understand the factors that go into the calculations. At BreakFree Home Loans, we want you to be fully armed to make informed decisions, so let’s take a look at essential factors that would affect your home loan repayment calculation.
Loan Amount
The amount you borrow, also called the principal, is the very base upon which your home loan repayment stands. The higher an amount, the heavier the burden of repayments. Inputting a specific loan amount into a repayment calculator determines what monthly repayments you will have to pay for the amount that has been borrowed.
When buying a property in Melbourne, where market prices can be exorbitant, careful consideration should be given to the total loan amount. You may want to consider options such as government grants or schemes that will alter the loan amount, thereby making a significant impact on your monthly repayments.
Interest Rate
Interest is another important determinant as it relates to your home loan and hence your repayments. Closed markets or type of loans can determine the different interest rates.
Also note that an interest rate change, however marginal, can drastically change repayments after some time.
A home loan repayment calculator enables you to see how much difference an interest rate change would actually make. If you need further help deciding between fixed rates and variable rates, BreakFree Home Loans would be glad to guide you towards a rate that best suits your needs.
Loan Term
The length of your loan (loan term) is another important aspect to consider in calculating repayments. In Australia, mortgages are often set for a term of 25 to 30 years, with shorter terms like 15 years cranking up monthly repayments. The longer the term, the lesser the payment; however, interest paid over the lifespan of the loan will keep on mounting.
By using a repayment calculator, you can test out various loan terms to see how it fits within your budget. A shorter one might save you some money in the long term, but it can put a strain on your monthly financial balance. At Break Free Home Loans, loan terms can be adjusted to suit one’s personal situation.
Repayment Frequency
The repayment frequency, which is usually ignored, can cause a significant impact on how much one pays in the long run. A typical repayment is done on a monthly, fortnightly, and weekly basis. The more frequency you choose for repayment, the less interest amount you will pay since it reduces the outstanding principal amount faster.
Almost all home loan repayment calculators have the option of changing the repayment frequency to see how it will affect your entire loan repayment schedule. If you can afford to make fortnightly or weekly repayments, that could be worth considering.
Extra Repayments and Redraw Facility
The availability of extra repayments or redraws is offered by many lenders, including Break Free Home Loans. If you can make extra repayments, you can reduce the size of your mortgage more quickly, thereby reducing the amount of interest accrued over the life of the loan.
The home loan repayment calculators usually have an option to estimate the impact of these payments on your repayment. Be sure to check this if you are looking to pay off your loan faster and save some money on interest.
A home loan repayment calculator is a smart choice to outline one’s financial commitment before any signing of loan agreements. By factoring in all the variables of loan amounts, interest rate, loan term, repayment frequency, and extra repayments, you get a much clearer picture of what you should expect. At Break Free Home Loans, we are committed to finding the perfect home loan solution that fits your particular circumstance. If you need help or advice, feel free to contact us – we will guide you every step of the way!