Mortgage Calculator: How to Find the Best One

Date Published: 28 February 2022

Typically, when you use a mortgage calculator, you want to know what your mortgage payments will be (obviously). A couple borrowing, say, $800,000 for an investment property might want to know that, at today’s rates, the rent is likely to cover the mortgage payments.

Simple mortgage calculators can provide this answer.  Plug in $800,000 over 30 years at 5% and you’ll get a rough idea of your monthly payments.

Simple Mortgage Calculator

But with the complexities of applying for a mortgage these days, mortgage calculators need to do more than simply telling you what your payments will be once you have the mortgage. At the Mortgage Lab, we’ve tried to combine a simple mortgage calculator that will give you a straight answer on payments with the ability to add in extra information if needed. Check out our calculators here.

Calculating Extra Payments on a Mortgage Calculator

It is amazing the difference even a small extra payment makes. It’s worth investigating this more. Our couple above, borrowing $800,000 over 30 years at 5% would be paying $991 per week.  But paying an extra $100 per week (total $1,091) saves them ~$104,000 in interest and reduces the mortgage term by over 4 years to under 26 years.

How to calculate the benefits of extra payments on your mortgage

While a simple calculator that tells you basic repayment information is useful, we think it’s important to have access to how much you will save if you can afford to pay more. Could you afford an extra $50 per week? How much will that save you in the long run? What about an additional $100 per week?

If you already have a mortgage, try it now. How much will you save by increasing your payments a small amount?

What to know about calculating interest-only payments

There are times when it might be useful to make your mortgage payments interest only. For example, there are sometimes tax advantages to paying down your personal mortgage first (the portion of your mortgage that isn’t tax-deductible). Or maybe one parent is going on maternity leave for a year and you’d like to temporarily reduce your payments.

It’s important to realise that the bank will not allow you to continue with interest-only payments indefinitely. Typically the banks like your mortgage to be paid down in 30 years. If you have an interest-only period of 5 years, the banks will want you to pay your mortgage down in the remaining 25 years. When you’re calculating what your interest-only payments will be, it’s useful to also calculate the increased principal and interest payments when the interest-only period is finished.

You can find out more about interest-only mortgages in our article here.

Choose a mortgage calculator that presents the information in a way you understand

Everyone is different and likes information presented in different ways. For some, a summary box of mortgage information is best. Others like to see a graph showing how the payments will affect the mortgage.

Mortgage Lab’s calculators present a variety of information so that anyone, no matter how they like their information presented, will get what they want.

Mortgage Calculator Summary information

If you just like the barebones information, our summary box will tell you your expected payments and the interest rate selected.  It will then try to guess the future payments after your fixed period and estimate the total interest you’ll pay over the life of the mortgage.

This is the equivalent of the “simple” mortgage calculator.  The answer to “what will my repayments be at x%” is right there for you.

The summary information shown in the mortgage calculator

Your mortgage as a graphic

If you like your information presented to you in a pretty, graphical picture, our Loan Summary tab is for you. With the information you have put into the calculator, the calculator tells you how much principal is still remaining each year (ie; how much you have paid off).  

Try not to get overwhelmed by the information under “Outstanding”. That is the total amount you still have to pay for the mortgage but remember, you’re doing this one payment at a time over many years.

How does each year look as you pay down your mortgage

Your mortgage as a graph

Sometimes seeing the payment over your entire mortgage is a better way for you to visualise how your mortgage is going. Our second tab – titled “Repayment chart” – is for you.  This shows how much you have left in total to pay on your mortgage in blue (the “Outstanding” field from the previous paragraph) and the amount you actually owe on your mortgage in dark grey.

It’s worth noticing that in the beginning, you don’t really pay a lot off of your mortgage. The bulk of your money is going towards paying the interest from your loan. This can be a bit demoralising but is exactly the reason why making extra payments is so worthwhile at the beginning of your mortgage – any extra payment saves interest costs for the full 30 years of your mortgage.

Graph of mortgage from calculations

Your mortgage as a table

Finally, some people want to see the barebones numbers for a mortgage.  They want to know that a payment of $991 is made up of $769 interest on the first payment and what that means for the outstanding balance of the mortgage. Our final tab called “Loan amortisation table” is for you.

Amortisation table of mortgage

More complicated calculations

There is a lot more you could extract from a more complicated calculator.  You could see what happens to a mortgage if the rates slowly climb to 7% over the next few years. You could test part of your mortgage on interest-only and the remaining on heavy principal and interest payments.

With the addition of these options, we run the risk of making a mortgage calculator too complicated for the majority of people to use. Mortgage Lab advisers have the ability to calculate most of these scenarios in our system. But offering it for general use, we feel, would lead to a tragically complicated-looking calculator.

Banks tend to provide simple calculators. Mortgage Lab has decided for the mid-range complexity. A calculator that provides a simple answer for those who want it, but can look deeper into the mortgage for those that want to play around with the numbers. We hope you enjoy calculating what you can afford next!

Mortgage Lab’s mission is to be the digital town square for financial decision-makers to gain knowledge about their current and future mortgage. Follow us on Facebook and LinkedIn or subscribe to our newsletter to be notified of our latest articles.

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