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Home | Break-even | Savings |
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Fixed vs Variable Loans
For your savings which is better? |
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Fixed vs Variable Loans Calculator - Savings enables you to enter how much you have in savings and determine whether it is better to have a fixed rate loan with your savings earning interest, or have a variable rate loan with your savings in the mortgage offset account saving you interest on your loan. The amount by how much one approach is better than the other is also provided. |
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Mortgage The mortgage is the loan you have borrowed. The loan is assumed to be an interest and capital loan and not an interest only loan. Years Enter the number of years the loan will be paid off over. Frequency The default payment frequency is for payments to be monthly. However if you are paid fortnightly or weekly, then taking the payment out each pay period may make payments appear easier. NOTE: For simplicity interest on loans is calculated for the payment frequency. In reality many (possibly most) loans charge interest daily. For this calculator use the published annual interest rate, not the effective or comparative interest rate. Fixed Interest The fixed interest rate you enter is the fixed rate per cent made available from your bank or financial institution. Variable Interest The variable interest rate you enter is the variable rate per cent made available from your bank or financial institution. Payment Payment is the monthly payment amount you need to pay to service the loan. For the variable rate loan the payment is for the entire period of the loan based on the current variable interest rate. For the fixed rate loan the payment is for the period where the rate is fixed. Once the fixed period is over, unless you again fix the loan, the loan will then revert to the current variable rate and the monthly payment would then need to be determined for the remainder of the amount owed. Total Payments Total Payments shows you how much you will pay over the life of the loan. For the variable rate this is the amount over the life of the loan at the current variable rate. For fixed rate the calculation works out the payments during the fixed period and then assumes the remaining loan is at the variable rate. Total Interest The Total Interest amount is also shown for those who are interested. A figure is provided for both the fixed interest rate (which then reverts to variable) and the variable interest rate. Savings The Savings amount is the amount you have or expect to have in savings. Savings Interest % The Savings Interest % is the interest rate you earn on your savings. If you have a fixed rate loan with no mortgage offset account you'll have your savings in other accounts earning 0% or more interest. Because that interest is taxed the amount you end up in your pocket is reduced. Tax Rate The tax rate is your current marginal tax rate. That is the highest tax rate that applies to your current income. You can find the tax rates for 2019/2020 at ATO Tax Calculator. Medicare Levy The Medicare Levy is currently 2% (as @ 9/9/2019). If the Medicare Levy Surcharge also applies add both levies together and use the result as the Medicare Levy. Best Over Fixed Period Based on the figures entered you'll be shown whether the best result is Fixed + Savings or Variable + Offset. In addition the amount you're better off is also shown. NOTE: The mortgage offset amount assumes the amount is put into the offset account at the start of the fixed period and interest saved compounds each period for the number of years which would have otherwise been at the fixed rate. Financial Calculators
Future Value Calculator Disclaimer The Fixed vs Variable Loans calculator web app comes with no warranty expressed or implied. The Fixed vs Variable Loans calculator web app is only for informational purposes and is not guaranteed to be error free. The information on this page is not intended to be advice. Privacy No personally identifying information is required to use this calculator. Your information is not used for any other purposes except for providing the results of the calculation. Information entered into the calculator is not logged or recorded in the site's logs. To our knowledge no record of your data is kept by this site. Your data is private and only you know what you enter. |
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