How we calculate

Current assumptions

Assumption	Value	Source
Example interest rate used as a default	6.50% p.a.	Set near the middle of current owner-occupier variable rates. Change it to your own rate.
RBA cash rate	4.60% p.a.	Reserve Bank of Australia
Serviceability buffer	3.00 percentage points	APRA, confirmed May 2026
Income tax	2026-27 resident rates, Medicare levy 2%, low income tax offset	Australian Taxation Office
Stamp duty	2026-27 schedules for all eight states and territories	State and territory revenue offices

Mortgage repayments

We use the standard amortisation formula: repayment = P × r ÷ (1 − (1 + r)⁻ⁿ), where P is the loan, r is the rate per period and n is the number of periods. Weekly, fortnightly and monthly figures use 52, 26 and 12 periods a year. Interest is calculated on the balance each period. For interest-only loans, the repayment during the interest-only period is the balance × r, and the principal and interest repayment afterwards is calculated over the remaining term.

Limits: the rate is assumed constant for the whole term. Fees, rate changes and lender-specific rounding are not included. Open the repayment calculator.

Extra repayments and offset

We run the loan month by month. Extra repayments are added to the minimum repayment and go straight to principal. A lump sum reduces the starting balance while the minimum repayment stays at the original amount, so the loan finishes earlier. An offset balance is subtracted from the loan balance before interest is charged, and is assumed to stay constant. The loan is treated as finished when the offset balance could repay what is left. Open the extra repayment calculator.

Borrowing power

1. Net income: gross income less 2026-27 income tax, Medicare levy and low income tax offset. Rental income is counted at 80%.
2. Living expenses: the higher of what you enter and a minimum of $1,750 a month for one applicant or $2,700 for two, plus $520 a month for each dependant. These are our estimates, similar in purpose to the benchmarks lenders use.
3. Commitments: other loan repayments, 3.8% of total credit card limits a month, and compulsory HECS-HELP repayments under the 2026-27 marginal system (15 cents per dollar above $69,528, plus 17 cents per dollar above $129,717, capped at 10% of income).
4. The monthly surplus is turned into a loan amount using the present value formula at your rate plus the 3.00 point buffer, over your chosen term, rounded down to the nearest $1,000.

Limits: lenders use their own benchmarks, income shading and policies, and some apply a minimum assessment rate. Results can differ by tens of thousands of dollars between lenders. Open the borrowing power calculator.

Stamp duty

Each state’s 2026-27 general scale is applied to the price, followed by any owner-occupier rate or first home buyer concession for that state. Where a state charges “per $100 or part thereof”, we round up in the same way. Key rules included:

• NSW: indexed 2026-27 thresholds and premium duty above $3,870,000. First home buyer exemption to $800,000 and concession to $1,000,000 (we estimate the concessional scale as a straight-line phase-in).
• Victoria: general rates, principal place of residence rates to $550,000, first home buyer exemption to $600,000 with a straight-line concession to $750,000.
• Queensland: general and home concession rates, first home concession to $700,000 phasing out by $800,000 (estimated as straight-line), and no duty for first home buyers of new homes.
• WA: general rate, concessional rate for homes to $200,000, first home owner rate from 7 May 2026.
• SA: general rates, no duty for first home buyers of new homes.
• Tasmania: general rates. The first home buyer exemption ended on 30 June 2026.
• ACT: owner-occupier and non-owner-occupier rates, no duty for eligible first home buyers from 1 July 2026.
• NT: the formula for values up to $525,000 and flat rates above, with the House and Land Package Exemption for qualifying new homes.

Limits: foreign purchaser surcharges, vacant land, off-the-plan, pensioner and other special concessions are not included. Eligibility conditions such as residence requirements apply. Always confirm with the revenue office. Open the stamp duty calculator.

LMI and upfront costs

LMI is estimated as a percentage of the loan, based on the LVR band (to 85%, 90% and 95%) and loan size, then insurance duty for the state is added (for example 9% in NSW and Queensland, 10% in Victoria, WA, Tasmania and the NT, 11% in SA, nil in the ACT). These rates are indicative only, because insurers and lenders price LMI differently. Stamp duty uses the engine above. Fees are the amounts you enter. Open the LMI calculator.

Refinancing

We calculate the monthly repayment on your balance at the current and new rates over the same remaining term. Break-even is net switching costs (costs less cashback) divided by the monthly saving, rounded up to whole months. Interest saved compares total interest on both loans, less net costs. Open the refinance calculator.

Corrections

We review rates after every RBA decision and stamp duty rules after each state budget and 1 July change. If you spot something out of date or a result that looks wrong, please tell us.