Most mortgages will consist of a variety of processes and one of the earliest relates to the calculation of the amount that can be borrowed by the applicant. With the majority of banks being willing to lend hundreds of thousands of dollars to their customers, it’s very important to obtain an understanding of how much an applicant can afford to borrow in the first place.
This is where online mortgage calculators come in handy, as they can work out the most important factors associated with taking out a loan on a home
Once you’ve found a reliable calculation tool, you’ll notice that there are a variety of input fields where data can be added. The first is the total amount of the required sum, including the deposit. This amount will be calculated in Australian Dollars (AUD), regardless of whether you add the $ symbol or not.
Next you will need to add the deposit amount; this will usually be anywhere up to 25% of the amount entered in the total sum field. It is possible to pay more, but for an idea of what a particular bank will expect percentage-wise, it’s worth getting in touch with them to find out. Just below this section is the interest rate field and to find the latest percentage, you could also contact the lender that you are considering approaching.
The field underneath will relate to the duration of the entire mortgage (in years). This can be anywhere between a few years up to 30, although some banks will dictate specific periods depending on the applicant’s age. The longer this period is, the lower repayment amounts can be (depending on how frequently you choose to pay back what is owed).
The final field is the payment period, also referred to as frequency. This can be modified to suit weekly, bi-weekly, or monthly options, with the first one being ideal for those hoping to repay what they owe as quickly as possible, and the monthly alternative being the standard payment frequency.