A loan calculator is a great help when someone needs to find out how much he can borrow. This is quite often is a complex and at times daunting task for a lot of people as they do not always know what criteria the lender applies when calculating serviceability. Another loan calculator that is often worthwhile checking out is the comparison loan calculator – this is invaluable when looking for finance as there is such a variety, literally thousands, of different mortgage products available to choose from across a wide range of different lenders and all of them have different features costs and interest rates.

Loan calculators thus serve as a research tool and can be used by potential borrowers and existing clients who want to ascertain how much they can borrow and at what rates.

An Interactive Loan calculator enables potential borrowers to determine the best home loan based on the amount to be mortgaged, the term of the mortgage, and the interest rate. They are self-help tools that save considerable time and allow for various reports and comparison of monthly and yearly amortisation schedules. They provide potential borrowers with a guide to assist them in making their financial decisions but it should be remembered that potential borrowers circumstances may be quite different and unique and a loan calculator while assisting them in assessing their individual financial situation & their borrowing capacity does not always contain the variables relied upon by the lender when assessing a loan.

In addition a loan calculator generally only reflects the interest rate quoted. A loan calculator does not take into account the costs or fees that might be charged on a monthly basis by the banks and which have an impact on the real interest rate you are paying.

e.g. If you input $100,000 @ 7.95% into the loan calculator the simple monthly interest would be $662.50

There is no provision to input costs into the loan calculator.

If you have an $8 per month fee then the monthly cost to you will be $662.50 + $8 = $670.50

This equates to an interest rate of 8.04% p.a.

A "Payment Analyser" loan calculator will assist borrowers in calculating their future mortgage repayments for several payment frequencies (monthly, fortnightly, weekly). The loan calculator will show how many years the life of the loan will be shortened by if you do in fact pay on a fortnightly as opposed to monthly basis. With the help of a loan calculator, existing borrowers can clearly see the impact made on their monthly loan repayment amounts should they decide to switch their rate from variable to fixed, make additional repayments, vary the term of their loan or change from one loan product to another. The impact on their cash flow can be quickly established. If times are tough, cash flow tight and fixed rates attractive it may be better to fix your rate for budgeting purposes.

Make use of a loan calculator whenever you are reviewing your mortgage. It is a useful tool and could end up saving you money.