Buying a home

Buying a home is not one calculation, it is a sequence of them, and the order matters. Most people start at the repayment and work backwards, which is why the deposit and the loan-to-value ratio come as a surprise later.

This collection runs the other way: what you can put down, what that means for the size of the loan and for lender’s mortgage insurance, what the repayment on that loan looks like, and only then what you can do to shorten it.

Working through it

1. Step 1

   Start with the deposit, not the repayment

   Work out what a given percentage of a purchase price actually is in dollars, and what is left to borrow. This is the number that decides everything downstream.

   Open the deposit calculator

2. Step 2

   Check the loan-to-value ratio

   LVR is the loan as a percentage of the property value. Above 80% most lenders require lender’s mortgage insurance, which is a real cost that a repayment calculator will not show you.

   Open the lvr calculator

3. Step 3

   Price the repayment

   Once you know the loan amount, the repayment follows from the rate and the term. Try a rate a percentage point or two above the current one — that is the buffer a lender applies when assessing you.

   Open the mortgage calculator

4. Step 4

   See what extra repayments are worth

   A small amount added to every repayment comes off the principal, so it saves interest for the whole remaining term. The effect is much larger early in the loan than late.

   Open the extra repayments calculator

5. Step 5

   Compare an offset balance

   Money in an offset account reduces the balance interest is charged on while staying accessible. Compare it against the same money paid off the loan directly.

   Open the offset calculator

What these tools do not cover

• None of these figures include stamp duty, conveyancing, building and pest inspections, moving costs or council rates.
• Lender serviceability assessments are more detailed than any of these tools — they consider your expenses, existing debts and an interest-rate buffer.
• A quoted interest rate is assumed to hold for the whole term, which almost never happens in practice.

Each calculator lists its own assumptions and sources in full. Results are estimates — see the disclaimer for what that means before you rely on a figure.