The internet is awash with calculators that give you insights into aspects of your life.
For the morbid, there are calculators that estimate the date of a person’s death.
For the sleepyheads, there are others estimating how much time each of us spends snoozing.
For the puerile, there are calculators to work out how many days people spend sitting on the toilet.
All have their place, I guess, but none deserve praise like mortgage calculators, which show how much of your future wealth lazy mortgage management flushes away.
Mortgage calculators lay bare the money-sucking power of debt, clearly indicating why Australian bank shareholders have grown so wealthy.
But no clearer device exists to help plot debt escape plans.
A mortgage is virtually unavoidable in a successful, selfmade money life, so it is worth understanding. Have amortgage strategy
Aim to minimise interest costs Never pay debt off on the bank’s timetable
It’s been easy to be lazy about the mortgage as house prices rose, but playing with a mortgage calculator can change laziness into debt-busting action.
I don’t know about you, but my list of life missions never included making bank shareholders rich.
Plug in the amount you owe, the interest rate, and the term of the loan, and an online mortgage calculator will tell you the amount of amount of your future income the bank will get from you.
Say you owe $500,000 (a debt people aged 50 or more never had to shoulder to do something as ordinary as buying a house).
And say you believed the average interest over the lifetime of the mortgage would be 6 per cent (a bit low a reckon), then you will transfer $579,190 of your future income to a bank.
The awesome thing about mortgage calculators though is that you can work out the value of making extra payments now.
Stick in an extra $50 a month, and, in the above case, the amount of interest the bank will get drops by $30,000.
And the borrower would get to say goodbye to the bank a year and two months sooner.
Makes you want to pay $100 extra month, or $200, doesn’t it?
Mortgage calculators make plain the wages of frugality.
These days I only used mortgage calculators for work.
My favourite is an American one, partly because it provides a tragic reminder of what sane property prices look like.
When I last popped on the suggested ‘‘home price’’ was just $362,500.
In the US, that’s a nice home. In Auckland it’s a festering rattrap so squalid the SPCA would pop round with very stern faces if you tried to house a dog there.
Second, the ‘‘suggested’’ interest rate is currently around 4 per cent.
But if you are splitting your home loan between floating and fixed, the Westpac mortgage calculator might be more helpful.
Newer homeowners have to be awake to their mortgages in the way previous generations didn’t.
Big mortgages, ageist employers, insecure work, and the threat of jobs being automated away or shifted overseas, all make getting a debt-free home a priority as early as possible.
For them, familiarity with a mortgage calculator is essential.
Online calculators can tell you many things, including the time you will spend in the smallest room.