Numbers
Four numbers, in this order
Four numbers decide most Australian borrowing outcomes, and they matter in a particular order. Here is what each one means, the formula behind it, and what changes the answer — so that when you run them in a maintained calculator, you know what you are looking at.
- 1
Loan-to-value ratio
loan amount ÷ property value × 100
This one number decides whether lenders mortgage insurance enters the picture, which tier of pricing you sit in, and whether a guarantee scheme is relevant. It moves the total cost far more than a 0.1% difference in rate.
Watch: Use the lender's valuation, not the purchase price and not what the neighbour sold for. They are frequently different numbers.
- 2
Repayment at a stressed rate
monthly repayment calculated at your rate plus about three percentage points
Lenders assess your capacity at a buffer above the actual rate, and so should you. If the stressed figure is uncomfortable, the loan is too big regardless of what an approval says.
Watch: The buffer is a supervisory expectation set by the banking regulator and it has changed before. Check the current position rather than assuming three points.
- 3
Total cost over the term
monthly repayment × number of months + upfront fees
Two loans with the same monthly figure can differ by tens of thousands once the term differs. Refinancing that resets a 22-year remaining term back to 30 years lowers the payment and raises the total.
Watch: Comparison rate is the fair way to line up two consumer products, because it folds most fees into one number on a standard example.
- 4
Break-even on a switch
total switching cost ÷ monthly saving = months to break even
This is the only calculation that tells you whether a refinance was worth doing. Switching cost means discharge fee, new lender fees, government registration charges and any fixed-rate break cost.
Watch: If you might sell or move before the break-even month, the saving never actually arrives.
Where to actually run them
Use a calculator that someone maintains against current rules. The consumer regulator publishes free ones, and every lender publishes their own — run both, because the lender’s version uses the lender’s assumptions, which is exactly what you want to see before an application.
- Moneysmart mortgage calculator (ASIC)
- Moneysmart mortgage switching calculator (ASIC)
- Moneysmart budget planner (ASIC)
Estimates. Any figure produced by any calculator, including the official ones, is an estimate built on assumptions rather than a quote or an approval.
Page reviewed 17 August 2026.