How to Use Mortgage Calculators to Make Smarter Home Buying Decisions in Australia

Buying a home is one of life’s big decisions. But knowing what you can afford doesn’t have to be complicated. With a mortgage calculator, you can take the guesswork out of home loans and make clearer, more confident decisions.

If you're looking to find out how much you can borrow or what your mortgage repayments might be, you've come to the right place. Banks will often let you borrow more money than you can realistically afford - we’ll help give you a better idea of what’s actually manageable.

You can run the numbers in your own time, from the comfort of home. When you're ready, we’re here to help confirm or clarify anything.

This guide shows you how to use mortgage calculators properly and how they can help you understand repayments, loan options, and what your money really gets you.

📌 Related Tool: Mortgage Repayment Calculator

Work Out Your Mortgage Repayments

Keen to know how your repayments will be affected by a change in the total amount of your mortgage, the loan term, or the interest rate? Just pop your details into our quick mortgage repayment calculator and see how the payment amount is affected.

Refinancing Can Help You Save, Instantly.

Already got a mortgage? See how you can save $100,000's in total interest repayments and wipe years off your mortgage load term. Use this calculator to see how much you can save.

📌 Related Tool: Mortgage Refinancing Calculator

Calculating Your Borrowing Power

A mortgage calculator is a good place to start when thinking about how much you can borrow. But many variables affect how much a bank will lend you. Here are some key things to consider:

📌 Related Tool: Borrowing Capacity Calculator

Figure out what income you're left with after expenses

Banks factor in your Uncommitted Monthly Income (UMI) to ensure you’ll still have money left over after your bills. A general guide is that lenders like to see around $300 per adult as a buffer. Expect to provide three months of bank statements to show your spending habits.

Monthly subscriptions affect your borrowing power

It’s easy to overlook, but $100/month in subscriptions can reduce your borrowing power by up to $18,000. Cutting unnecessary expenses could significantly improve your borrowing position. Budgets can be super helpful, and as a couple it helps you to align your goals.

Keep an eye on interest rates

Banks stress test your application using higher “buffer” interest rates to make sure you can still afford repayments if rates rise. Our calculators factor this in, giving you a more realistic estimate. In Australia you get stress tested with a 3% buffer generally which should give you confidence knowing that you have been assessed at that level.

I write on this subject all the time so connect with me on LinkedIn here

📌 Related Tool: Borrowing Capacity Calculator

Get schooled up so you can make smarter decisions

The more you understand about the lending process, the better your outcomes. That’s why we create tools and articles to help you stay informed at every stage.

How to Get the Best Home Loan: What Australian Lenders Look For

Understanding the Basics of Mortgages

Before diving into the specifics of mortgage calculators, it’s worth understanding how mortgages work.

A mortgage is a loan used to purchase property, where the property itself is the security for the loan. You repay the loan over time - usually in monthly instalments that cover both the amount you borrowed (the principal) and the interest.

There are several types of mortgages:

• Fixed-rate mortgages: predictable repayments with the same rate over the loan term
• Variable-rate mortgages: rates fluctuate with the market
• Split loans: part fixed, part variable
• Government-backed loans: for eligible buyers (FHLDS, Keystart, etc.)

The key parts of any loan include:

• The interest rate
• The loan term (e.g., 25 or 30 years)
• The size of your deposit
• Whether there are other costs, like Lenders Mortgage Insurance (LMI)

These factors shape your monthly repayments and the overall cost of the loan.

Types of Mortgage Calculators

There are different types of calculators to help with various questions:

1. Repayment Calculator – Estimate your monthly repayments based on loan size, interest rate, and term.
2. Borrowing Power Calculator – See how much you may be able to borrow based on income and expenses.
3. Extra Repayment Calculator – See how adding extra repayments can reduce your interest and loan term.
4. Refinance Calculator – Compare your current loan to a new one and evaluate savings potential.

🔗 Related: Refinance Your Mortgage

How to Use a Mortgage Calculator

Using a mortgage calculator is straightforward:

1. Enter the property price
2. Add your deposit
3. Input the interest rate
4. Choose the loan term (usually 25–30 years)
5. Include extra costs (like insurance, taxes, LMI)
6. Review your estimated monthly repayment

💡 Stat: The average loan size for owner-occupiers in Australia was $626,055 as of early 2025 (ABS).

Common Mistakes to Avoid

• Using outdated interest rates
• Forgetting other costs like stamp duty or strata fees
• Treating calculator results as guarantees

Calculators are a planning tool - not a formal approval.

Understanding Your Mortgage: Types and Features

Learning about mortgages might not be fun—but the more you know, the better your decisions. Here’s a quick breakdown:

• Fixed Rate Mortgage – Locked in rate. Predictable payments. Early exit can mean fees
• Variable Mortgage – Rate can move. Offers flexibility. Good for making extra repayments
• Revolving Credit – A giant overdraft. Suits self-employed or irregular income
• Offset Mortgage – Links savings to your loan balance to reduce interest
• Interest-Only – Lower initial repayments. Often used by investors
• Capped Mortgage – Rare. Protects from rising rates but usually starts higher

Real-Life Examples

See how we've helped a number of clients regain control over their finances and save significant amounts of money and time case studies.

• A first-home buyer in Manly used our calculator to narrow down properties and stay within budget
• A refinancing couple saved over $28,000 in interest by switching lenders
• A contractor secured a home loan with a 10% deposit after showing strong income history

📈 Tip: Making $100/month in extra repayments on a $600k loan at 6% can save over $50k in interest and cut your loan by 5 years.

"Chris Dodson is a home loan wizard. I called Chris the day we found out an upstairs apartment was selling before going to market, and within less than 2 weeks, we paid our deposit and secured our home loan. Chris was calm, patient, very informative and provided continuous updates on how the process was tracking with the bank which was invaluable as first home buyers who were under time constraints. We cannot commend Chris enough for his hard work in helping us secure our first home loan and will definitely be recommending his services to anyone who is looking to buy a home."

What Paperwork Is Required?

You'll typically need:

• Income verification (payslips, tax returns)
• Deposit or savings evidence
• 3 months of bank statements
• Credit checks

Will I Be Able to Get a Loan?

Most likely. Every lender has different rules. We compare 50+ lenders to find the right one for you.

Can I Borrow Over 80%?

Yes. Many borrowers go to 90% or 95%. Just keep in mind it may come with a low equity fee or margin.

What if I'm Self-Employed or a Contractor?

If you’ve been trading for at least 1–2 years and can show solid income, you’ve got options. Lenders vary in how flexible they are—we know which ones to approach.

Can I Use a Guarantor?

Yes. A family member can guarantee up to 20%, helping you avoid LMI and boost your borrowing power.

What If I'm Buying a New Build?

Most lenders will go to 80–90%. You’ll need:

• A fixed price contract
• Progress valuations
• Final “as built” assessment before settlement

Final thoughts

Ready to take the next step?

Find out what you can borrow, run the numbers, or talk through your options with us.

Use our free tools or get in touch for a call to work through it together.

I’m Chris Dodson, the proud owner of Mortgages Plus. Your financial co-pilot - helping you get where you want to go.

• Planning mortgages.
• To achieve financial goals.
• So you can enjoy life.