# How is deposit amount considered in mortgage repayment calculations

Discussion in 'Loans & Mortgage Brokers' started by Tipsta, 10th May, 2020.

Join Australia's most dynamic and respected property investment community
Tags:
1. ### TipstaMember

Joined:
12th Jun, 2018
Posts:
18
Location:
Brisbane
Hi All,

Bit of a fundamental question here, but one I am stuck on. For OO loan, how is the value of your deposit taken into account when determining loan repayments? I cannot seem to find the answer myself.

The banks online calculators do not include deposit amount as an input, with the exception that some have options of "> 20%" or "<20%". However, these calculators match up with the excel PMT formula function, which also does not include a variable/input for deposit amount.

Syntax
PMT(rate, nper, pv, [fv], [type])

The PMT function syntax has the following arguments:
• Rate Required. The interest rate for the loan.

• Nper Required. The total number of payments for the loan.

• Pv Required. The present value, or the total amount that a series of future payments is worth now; also known as the principal.

• Fv Optional. The future value, or a cash balance you want to attain after the last payment is made. If fv is omitted, it is assumed to be 0 (zero), that is, the future value of a loan is 0.

• Type Optional. The number 0 (zero) or 1 and indicates when payments are due.
Is 20% deposit just assumed by both the PMT and bank calculators? This doesnt seem right to me?

2. ### ArchaonWell-Known Member

Joined:
20th Mar, 2017
Posts:
1,847
Location:
Newcastle
(purchase price + stamp duty + legals + LMI) - (Deposit + additional funds) = total loan amount

The repayment calculations would only be based on the total loan amount and not the purchase price I would assume.

jaybaraiolo and Lindsay_W like this.
3. ### TipstaMember

Joined:
12th Jun, 2018
Posts:
18
Location:
Brisbane
Thanks @Archaon, appreciate the response. Thats what I thought originally, but confused myself. Thanks

4. ### Terry_wLawyer, Tax Adviser and Mortgage broker in SydneyBusiness Plus Member

Joined:
9th Jun, 2006
Posts:
30,819
Location:
Australia wide
The loan is the amount you borrow.

Lindsay_W and [email protected] like this.
5. ### Lindsay_WWell-Known Member

Joined:
1st Jul, 2015
Posts:
2,447
Location:
QLD
If you're just working out a repayment amount those online calcs are OK - if you're trying to work out borrowing capacity they're useless.

Tipsta likes this.