# Home Loan Calculators

## Calculate your home loan borrowing power

How much could you potentially borrow for your mortgage? Our home loan borrowing power calculator will show you what a financial institution may lend you, based on your income and expenses.

Please Note: The calculations do not take into account all fees and charges and that the values provided can only be taken as an estimate of the amount to be borrowed and does not take into account specific factors used by individual lenders in determining their own criteria. Consider whether you need financial advice from a qualified adviser.

What can you do with a borrowing power calculator? Find out how much you could borrow in a home loan at different interest rates, loan terms, and income levels, with our CANSTAR Borrowing Power Calculator.

## Borrowing Power Calculator: How much can I borrow in a home loan?

The CANSTAR Borrowing Power Calculator calculates a hypothetical maximum loan amount that a borrower could apply for, based on the income and expenses entered into the calculator. This is called your borrowing power.

Financial institutions in Australia are legally required to ensure that you have enough dispensable income available to make certain monthly repayments before they can offer you a home loan. How much you can borrow for a home loan depends on various factors such as your income, regular expenses, and number of dependents (children) you have to support.

You can do any number of calculations about your borrowing power for a home loan with the CANSTAR Borrowing Power Calculator. Read on to find out how your borrowing power is affected by different levels of expenses and different terms and conditions on a loan.

### How we made our calculations

The calculations we’ve made are based on inputting the following data into our calculator, except where we have specified otherwise:

• Your Income: \$1,100/week in a single wage household (average working wage according to ABS, 2015: \$1,137/week, which equates to \$59,124/year)
• Annual Expenses: \$16,500/year (average Australian annual expenses used as default in this calculator)
• Car Loan Repayment: \$0/month
• Credit Card Repayment: \$200/month (average debt \$4,300 according to ASIC credit card debt clock at time of writing, means \$58/month interest + roughly \$100/month repayment if intending to repay debt)
• Other Expenses: \$0/week (assume expenses included above in average Australian annual expenses)
• Home Loan Interest Rate: 89% (average standard variable interest rate on our database at time of writing)
• Home Loan Term: 25 years
• Basic borrowing power based on these figures: \$319,000
• Monthly repayment based on these figures: \$1,844/month

The Borrowing Power Calculator includes a calculation to ensure that the borrower’s income could withstand the normal increases in variable interest rates over the life of the loan. Our calculator uses an interest rate buffer of 2.0%.

#### Disclaimer

The values provided can only be taken as an estimate of the amount to be borrowed and does not take into account specific factors used by individual lenders in determining their own criteria.

How much you can borrow is dependent on your personal financial situation, which will differ from the figures we have used in this calculation. You should carefully consider your own income and expenses when using our calculator to find out how much you could borrow.

CANSTAR makes no guarantees that your financial institution of choice will offer you a loan of a particular amount, and you should speak with a financial adviser before making any decisions.

## Loan term

Did you know that if you increase your loan term by just 5 years to a 30-year loan term, you could borrow tens of thousands of dollars more?

For example, by increasing your loan term from 25 years to 30 years, you could borrow \$21,000 more and make your monthly repayments \$42 cheaper. Of course – this can mean that you end up paying more interest over the life of the loan…

Loan Term You could borrow Monthly repayments
25 years \$319,000 \$1,844/month
30 years \$340,000 \$1,802/month

## What if I have other loans to repay?

To start with, if you had no other loans or debts to repay apart from your prospective home loan, you might be able to borrow \$348,000 on the income and other factors we’ve specified above.

But when you add other loans or debts to the mix, a financial institution offering a home loan will not let you borrow as much on your home loan. Again, this is because they are required to make sure that you do not take on so much debt that you could not afford to repay it.

For example, if you have a car loan with a repayment of \$415/month, you may be able to borrow \$57,000 less than if you had no debts to repay.

Expenses Cost You could borrow Home loan repayment
No debt \$0/month \$348,000 \$2,012/month
Credit card debt only \$200/month \$319,000 \$1,844/month
Car loan only
(\$20,000 at avg rate 8.42%)
\$415/month (rounded to \$400/month) \$291,000 \$1,683/month
Other payments only \$1,000/month \$205,000 \$1,185/month

## Interest rate

Using our base data input listed above, we can see that changing the interest rate on your loan makes a big difference to how much you can afford to borrow.

If you choose a loan at the minimum variable rate available on our database at the time of writing (for a loan of \$350,000), you might be able to borrow \$70,000 more than if you choose a loan at the maximum variable rate available.

Interest Rate You could borrow Monthly repayments
3.85%(min variable rate) \$352,000 \$1,829/month
4.89%(avg variable rate) \$319,000 \$1,844/month
6.31%(max variable rate) \$282,000 \$1,871/month

Splitting your home loan between variable and fixed interest rates can also make a great difference to how much you can borrow and what you pay in monthly repayments. Try our Home Loan Split Calculator to see how splitting your home loan between variable and fixed interest rates at different amounts can affect your home loan borrowing power.

## Working together: What if I have a partner?

If you have a partner who is also in full-time paid employment at the same average Australian wage, then your borrowing power might more than double.

Of course, with an increased amount borrowed on a home loan comes much larger monthly repayments!

Borrowers should tread very carefully when basing their borrowing power on both partners continuing to earn the same amount. What if the worst should happen and one of you was suddenly unable to work due to being unexpectedly let go, or became seriously sick or injured?

It may be a wise course to base your borrowing power on just one partner’s income, even if it means aiming for a less expensive home in a smaller dwelling or a location further from the city centre. Nobody wants to end up in financial hardship, and a little planning can go a long way towards preventing it.

## What if I have kids?

Everyone knows kids make life more expensive, and financial institutions will take this into account when calculating your borrowing power. In our calculator, your annual expenses jump up with your first child, and continue to rise with each additional child.

Having two children could lower your borrowing power by \$93,000 if you live in a single wage household.

No. of dependants Annual expenses expected You could borrow
0 \$16,500 \$319,000
1 \$20,400 \$273,000
2 \$24,300 \$226,000

Having said that, at the time of writing, households with a weekly income of \$1,022/week (\$2,044/fortnight) are eligible for a part-payment of the government Parenting Payment from Centrelink. This additional income may increase your borrowing power slightly.

Use CANSTAR’s home loan calculators when you’re doing your sums about how much you can afford to borrow in a home loan:

Are you trying to determine how much your home loan repayments will cost every month, or the total interest you’ll pay over the life of your mortgage? Sounds like you need a mortgage calculator.

Our home loan repayment calculator might be just the thing 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 either principal and interest or interest only.

What can you do with a repayments calculator? Find out how your monthly repayments could change in a home loan at different interest rates and loan terms, with our CANSTAR Repayments Calculator.

## Home Loan Repayments Calculator

Repayments on a home loan are usually made monthly, and they constitute the interest charged on your loan balance plus a small portion of your loan principal amount, unless you choose an Interest Only loan. Your monthly repayment is determined by your interest rate and your loan term, and it affects how much interest you pay over the life of your loan.

You can change the size of your monthly repayment by changing many factors discussed below. The CANSTAR Repayments Calculator makes these repayment calculations easy and in just a few clicks, you can imagine different ways of repaying your loan.

## How we made our calculations

The calculations we’ve made are based on inputting the following data into our calculator, except where we have specified otherwise.

• Loan Amount: \$350,000
• Repayment Type: Principal + Interest
• Repayment Frequency: Monthly
• Interest Rate: 89% (average standard variable interest rate on our database at time of writing)
• Home Loan Term: 25 years
• Basic monthly repayments based on these figures: \$2,024/month
• Total interest repayable over life of loan: \$257,109

According to CANSTAR’s comprehensive research database, the majority of Australians (60%) are looking for a loan amount of between \$350,000 and \$749,000 – so we’ve based our home loan calculations for this article on a loan of \$350,000. You can enter the specific loan amount you are looking for in our home loan calculators and our comparison of home loans on the market.

#### Disclaimer

How much you can afford to repay per month is dependent on your personal financial situation, which will differ from the figures we have used in this calculation. You should carefully consider your own income and expenses when using our calculator to try out different monthly repayments.

CANSTAR makes no guarantees that your financial institution of choice will offer you monthly repayments of a certain amount, and you should speak with a financial adviser before making any decisions.

## Repayment Type

Switch from Principal + Interest to an Interest Only loan, and you won’t actually repay the principal on your loan, but you will pay less per month in total.

Repayment Type Monthly repayment Interest over loan term
Principal + Interest \$2,024 \$257,109
Interest Only \$1,426 \$427,875

Obviously, if you are able to make additional repayments – without incurring extra fees and charges for it – you will be able to pay off your loan faster and pay less interest over the life of the loan. Use our Home Loan Extra Repayments Calculator to work out how additional repayments could affect your loan.

## Interest Rate

Changing the interest rate on your loan makes a massive difference to your monthly repayments. This is why it’s so important to compare your options on the CANSTAR website and find the best value home loan for your situation.

If you choose a loan at the minimum variable rate available on our database at the time of writing (for a loan of \$350,000 on the terms listed above), your monthly repayments could be \$70,000 less than if you choose a loan at the maximum variable rate available.

Interest Rate Monthly repayments
3.85%(min variable rate) \$1,819/month
4.89%(avg variable rate) \$2,024/month
6.31%(max variable rate) \$2,322/month

Splitting your home loan between variable and fixed interest rates can also make a great difference to the cost of your monthly repayments. Try our Home Loan Split Calculator to see how splitting your home loan between variable and fixed interest rates at different amounts can affect your monthly repayments. Not every financial institution offers a split loan option, however, so check the Split Loan Option column in our comparison tables.

#### Don’t forget the other costs

We would be remiss if we didn’t remind you that there is more to the cost of a home loan than the interest rate the institution charges. Remember to also look at the comparison rate, ongoing fee, and up-front fee listed when you’re comparing home loans using our comparison tables.

## Loan Term

If you increase your loan term by just 5 years to a 30-year loan term, you could pay hundreds of dollars less per month in repayments – but tens of thousands of dollars more in interest over the life of the loan.

For example, by increasing your loan term from 25 years to 30 years, your monthly repayments decrease by \$169/month, but the interest you pay overall increases by \$60,841.

Loan Term Monthly repayment Interest over loan term
25 years \$2,024 \$257,109
30 years \$1,855 \$317,950

## Loan Amount

The most obvious way to make your loan more affordable is to apply for a smaller loan amount. This will mean either saving more for your deposit beforehand, or searching for a less expensive home to buy.

If you decreased your \$350,000 expected loan amount by \$50,000 to a \$300,000 loan amount, you could pay \$300 less per month in repayments, and \$37,000 less in interest.

What about a smaller reduction? If you decreased your \$350,000 expected loan amount by just \$5,000 to \$345,000, your monthly repayments will decrease only slightly, but you’ll pay \$4,000 less in interest over the life of your loan.

Loan Amount Monthly repayment Interest over loan term
\$450,000 \$2,602/month \$330,569
\$445,000 \$2,573/month \$326,896
\$400,000 \$2,313/month \$293,839
\$395,000 \$2,284/month \$290,166
\$350,000 \$2,024/month \$257,109
\$345,000 \$1,995/month \$253,436
\$300,000 \$1,735/month \$220,379