Australia Mortgage Calculator

Most Australian mortgages are variable rate, where the rate floats with the cash rate set by the Reserve Bank of Australia. Fixed rate options exist (typically 1, 2, 3, or 5 years) but most borrowers stay variable to keep flexibility - extra repayments, redraw facility, offset accounts all work seamlessly with variable rate, while fixed rate often restricts these features.

On a $600,000 mortgage at 6.2% over 30 years, monthly payment is about $3,675. Extra $200/month into an offset account effectively reduces the interest-charged balance by $200, saving roughly $30/month in interest while keeping the cash accessible. The offset account is a uniquely Australian product feature that most US and UK borrowers don't have.

Banks use the Higher Income Multiple (HIM) plus serviceability assessment. Generally 5-6x gross household income for owner-occupier, less for investment properties. Serviceability is stress-tested by adding 3% to the actual rate - so a 6% loan is qualified at 9%, reducing borrowing capacity by roughly 20% from face-value affordability.

A household earning $150,000 typically borrows $750,000-900,000. Add a $100k deposit and you're looking at $850-1m purchase price. Stamp duty (state-specific), Lenders Mortgage Insurance (if LVR over 80%), and other fees consume another 4-6% of purchase price in cash at settlement.

If your loan-to-value ratio exceeds 80%, you pay Lenders Mortgage Insurance to protect the bank if you default. LMI ranges from $5,000-30,000+ depending on loan amount and LVR. On a $600k loan at 90% LVR, LMI is roughly $14,000. The premium is usually capitalised into the loan, so you're paying interest on it for 30 years.

First Home Guarantee scheme lets eligible first-time buyers purchase with 5% deposit without LMI - the government guarantees the gap. Saves real money on the upfront cost. Family Pledge (parents using their home equity as security) is another way to avoid LMI. Use the [Australia Stamp Duty Calculator](/australia-stamp-duty-calculator) to model full upfront costs.

Offset accounts work like savings accounts that reduce the interest-charged balance on your mortgage. $50,000 in an offset against a $500,000 mortgage means interest charged on $450,000. The math is identical to extra repayments, but offset money stays accessible - withdrawable for emergencies, holidays, or further investment.

Extra repayments directly reduce the loan principal. Less flexible than offset (some loans have redraw facilities to access extra repayments, others don't). For most borrowers, offset is preferable because it preserves liquidity. Investment property loans have specific tax implications - consult a tax accountant before structuring.