How much will my loan cost me?
The amount of your loan repayments is affected by:
How much you borrow
The more you borrow, the higher the repayments. Quite simple.
The term of the loan
The longer the term of the loan the LOWER your repayments will be. However the total amount of interest you pay on the loan naturally will be greater because of the longer term. Normally mortgage loans are made over 30 years. You can of course repay them sooner by paying extra each month.
The lower the interest rate the lower your repayments will be. On most loans the interest rate will vary over time so it is wise to allow a little bit of room in your budget for these variations. Of course, over time you can expect your income to increase as well.
The repayment calculator will give you an approximate calculation of what you can expect your repayments to be.
The actual interest rate that lenders will offer will be influenced by their perception of the risk involved. If you have an excellent credit rating and only want to borrow say 80% of the value of your house, then you may get the lowest rates available. On the other hand if your credit rating has a few “bumps” or you need to borrow more than 90% of house valuation, the lender will consider this a higher risk and may not offer you their lowest rate.
For many borrowers it is not the interest rate that is necessarily the most important factor in determining their best loan product, it is the flexibility that enables them to minimise the total interest repayment over the life of the loan.