With the current treasure trove of online information at our finger tips, it’s easy to consider ourselves experts on just about anything.

As Mortgage Brokers we see  the positive and negative effects of readily available information, as new and existing mortgage holders seek to arm themselves to the teeth with financial knowledge as they navigate the often-treacherous seas of finance.

Online mortgage calculators are a resource designed to offer guidance when it comes to the numbers aspect of purchasing or refinancing a home loan. The key word here to consider is “guidance”. It’s best to think of them as a go-to for a ball-park starting point to wrap your head around potential figures.

What Should You Steer Clear of When Looking at Online Mortgage Calculators?

The results from a Borrowing Capacity Calculator can be a trap you don’t want to fall down. These calculators are designed to pre-qualify you for a loan by assessing your ability to service a new facility. These are probably as worthwhile as the “Who were you in a past life?” quiz you did on Facebook.

There are just too many intricate calculations and metrics that a Lender uses to assess your ability to service a loan – not to mention the unique lending policies each financial institution abides by. These should never be used to confirm what you may or may not be able to borrow at a bank, only an experienced Mortgage Broker will be able to confidently offer that information.

What Mortgage Calculators are Handy to Use, but Still Proceed with Caution?

Many potential or existing mortgage holders often will run a quick calculation through a Loan Repayment Calculator and the other variations of it. These are perfectly fine for an estimate of what you might potentially be paying at a certain rate. There are a couple of catches to consider before you get excited about the money you will be saving by snagging the great rate you have seen advertised.

Firstly, do you qualify for that low rate you are basing your calculations on? Just because a lender advertises a rate does not mean that everyone will have access to it under their current circumstances. But more importantly, is that product right for you?

Secondly, there may be ongoing fees and charges attached to the product that could affect the repayment amount. Having a check of the Comparison Rate will give you a rough idea of the hidden charges that may be applicable. However, only an experienced Mortgage Broker will be able to give you accurate information regarding what repayments may be required for a new loan.

When Should I Use an Online Mortgage Calculator?

Online mortgage calculators can be helpful if they are used as they were intended – as a guide only. They may serve to be a helpful starting point for someone who is wanting to get an idea of what outcomes may be achieved to tweaks in their loan or looking at managing their money better.

It’s worthwhile noting that there are plenty of websites with a myriad of calculators available. Ensure that you use the resources on a reputable site attached to either an industry professional or government body such as ASIC.