Loan Calculator: a simple process!

Loan calculators are often the first port of call for people considering taking out a home loan. They're a useful and easy to use tool which can give you a good idea of how much you can borrow, and what your repayments may be. All you have to do is find a loan calculator on the internet and type in your desired loan amount, the interest rate, loan term and repayments schedule.

While it's tempting to plug the numbers in and then decide what amount you can borrow to buy your dream home, it's necessary to do a little extra research to determine the real costs associated with purchasing a house. Loan calculators don't take into account, for example, stamp duty costs, mortgage insurance or legal fees. They also offer no guarantee of what a bank is prepared to lend you. They offer only a ball park idea of the amount you may be able to borrow. They do not offer you the actual approval you need, but just act as a guide.

For formal approval, you need to contact your bank or non-bank lender and formally apply for loan approval. This process obviously takes a little longer than the instantaneous experience offered by a loan calculator. But if you're serious about taking out a home loan, it's best to use an online loan calculator only as a starting point; write down the figures it calculates, and take them to your lender, where you can discuss all the details regarding your loan.