Homepage Mortgage Calculator
What is a Mortgage?
Understanding the essential home-buying loan.
Simply put, a mortgage is a type of loan that helps people buy a house. It's a financial agreement between the borrower (the person buying the home) and the lender (usually a bank or Building Society). The lender offers the funds required to buy the property, and in exchange, the borrower commits to making regular monthly repayments to clear the loan, typically across a span of roughly 15 to 30 years.
Many people today can't afford to purchase a property using their own money. The mortgage steps in to cover a large part of the purchase price, bridging the gap between what you have saved (the deposit) and the property's total cost.
Purchase Breakdown
Example: $200,000 Property
- Deposit: $20,000 (Your money)
- Mortgage: $180,000 (Money borrowed from the bank)
- Result: You purchase the property without needing 100% of the funds upfront.
The Lifetime Cost (Interest)
The bank expects monthly repayments plus interest. Using the example above ($180,000 mortgage over 25 years at a 5.54% rate), the buyer repays a total of **$332,898**.
This means the buyer repays $152,898 more than the amount initially borrowed.
The Security Risk
Before approval, the bank performs a financial check (income, credit history). Because the mortgage is secured against the property, failure to make repayments results in a significant risk.
If you fail to repay the debt, your home could be repossessed by the bank.
"Unfortunately, with house prices continuing to rise, and the cost of living increasing, it doesn't look like we're going to have an alternative to a mortgage anytime soon."
Mortgage Payment Calculator
Estimate your monthly house payments quickly.
Estimated Monthly Payment
$0.00
Click below for detailed amortization schedules and property tax estimates.
Explore Advanced Calculator