How To Calculate Home Loan Repayments
Our home loan repayment calc tool above is good as a guide, but no calculator can predict the interest rate increases or decreases that may happen in future. A home loan is a long term commitment, so it's important to ensure you are comfortable with the minimum repayment amount, even if rates increase. Ask yourself this, if your home loan repayment rates increase by 2%, can you still afford it without becoming stressed? In Australia our interest rates are at a historically low level. So potential rate increases are something you should consider.
How Can I Protect Myself From Interest Rate Increases?
Fixed rate home loans offer the certainty of knowing your repayment amount won't change for the fixed term. However, fixed loans have restrictions and often limit the amount of additional repayments you can make before you are charged penalties. The maximum fixed home loan term in Australia presently available is 15 years. No lenders currently offer a 30 year fixed home loan term. Want to know more? Contact us or check out our article listing the benefits of Fixed vs Variable Home Loans.
The best way to protect yourself from interest rate increases is to pay your loan off. This may seem like an unrealistic goal given how much property now costs, but it is possible to make a difference to the interest you pay each month by making extra repayments. Check out our Extra Repayment Calculator to see how much money in interest you can save yourself by making even small extra repayments.
Home Loan Extra Repayments
At an interest rate of 5%, every $10,000 extra you manage to pay off your mortgage will save you a little over $40 of interest a month. After you've paid $20,000 extra off your loan you'll be a bit over $80 better off every month. Yes it is hard to make additional repayments in the beginning, but it soon pays off. If you want to make extra repayments, make sure you get a home loan that permits the amount of additional repayments you want to make. Contact us to discuss the types of loans that allow you to make extra repayments.
If you want to own your home sooner, we recommend you read The Barefoot Investor by Scott Pape. It's an amusing book about handling your money. It gives you the tools you need to pay off your debts and own your home sooner. In The Barefoot Investor Scott recommends contacting a cash-back mortgage broker so that you receive the trailing commission refund on your loan each month. A cash-back mortgage gives you up to 0.15%p.a. of your home loan balance as a refund, deposited into your bank account each month. That's what our brokers offer at Cash Back Mortgage Broking. Contact us to find out more about getting a cash-back home loan or read about how a cash-back home loan works here.
A cash-back mortgage broker will be happy to chat to you about the best types of home loans for making extra repayments, and the lowest home loan interest rates available. Just give us a call or use the contact us page.