Assumptions – current as at 5 April 2017 Editable assumptions Home Price Appreciation rate (HPA) % p.a. The default assumption of 2.5% p.a. is an estimate of prospective long term capital only property growth estimated based on historical national performance. You may edit this assumption. Investment return rate % p.a. The default assumption of 2.5% p.a. is an estimate of a generic investment portfolio that has risk-return characteristics consistent with real estate in the long term. You may edit this assumption. Inflation rate % p.a. By default, the inflation rate is assumed to be 2.5% p.a. This assumption is set at the mid-point of the Reserve Bank of Australia's 2–3% p.a. target range for price inflation. The amount you save each period and the ongoing ownership costs are assumed to increase with price inflation each period. You may edit this assumption. Rental increase rate % p.a. The default assumption of 2.5% p.a. is an estimate of prospective long term rental growth assuming a stable price-to-rent ratio in the long term. You may edit this assumption. Scenarios: Base LVR 80% or lower Quantifies the benefits of: buying a property now, versus renting and saving indefinitely. by quantifying and comparing the net savings and equity accumulated after a certain period of time under each scenario. Base LVR greater than 80% Quantifies the benefits of: buying a property now using LMI, versus continuing to rent and save for a 20% deposit, versus renting and saving indefinitely. by quantifying and comparing the net savings and equity accumulated after a certain period of time under each scenario. Input field explanations: Current rent (monthly) Recurring monthly rental payments. Assumes the amount you enter as rent per month (as adjusted for inflation) will continue to be paid each month throughout the period covered by the calculation. The rental increase rate is applied to the rent amount. Current savings (monthly) Recurring monthly savings. Assumes the amount you enter as savings per month (as adjusted for inflation) will continue to be saved each month throughout the period covered by the calculation. The investment return rate is applied to the savings amount. Property purchase price The purchase price of the home at the current time. Under the deferred purchase scenario, this grows at the house price appreciation rate until the borrower has saved a minimum 20% deposit. Savings (available for deposit and fees) The amount of savings you have available for the deposit and costs. This is used to determine the base loan amount and base LVR. Assumes that the total amount which has been saved will be applied towards the property purchase costs including the purchase deposit and the associated upfront costs such as stamp duty. The remainder of the property purchase costs are covered by the loan amount. Loan interest rate The rate of interest applicable to your loan. Assumed to be the annual nominal rate of interest, compounded monthly and to remain the applicable loan interest rate over the entire term of the loan. Loan term The term applicable to your loan. State The state where you will purchase the property. This is used to determine the amount of stamp duty payable. Additional homeownership costs (monthly) This includes ongoing costs such as council rates, property maintenance etc. Additional upfront fees (excluding LMI premium and stamp duty) This includes upfront costs such as loan establishment fee, conveyancing fees etc. Calculation fields and other assumptions: Monthly loan repayments Where the minimum mortgage repayment is more than the rent and savings amounts you enter (as adjusted for inflation), the calculator assumes the minimum loan repayments will still be made (ie. the borrower will reduce other expenses necessary to meet the minimum mortgage repayments). Where the minimum loan repayment is less than the rent and savings amounts you enter (as adjusted for inflation), the calculator assumes the excess amount will be deposited and saved. Total stamp duty Calculated based on the property purchase price and state of purchase, and deducted from the deposit. In all cases, assumed that the borrower is an owner occupier and that the purchased dwelling will be their principal place of residence. Under the deferred purchase scenario, stamp duty is calculated on the future assumed purchase price. The rates and thresholds for stamp duty calculations are sourced from the different local State and Territory revenue office websites. Refer tofirsthome.gov.aufor details. Total LMI premium LMI premium payable based on base loan amount and base LVR. LMI premium is based on Genworth standard LMI premium rates. LMI premium rates may vary by lender. Base loan amount Property purchase price less savings (available for deposit and fees), stamp duty and additional upfront costs. Capitalised loan amount Base loan amount + LMI premium (if payable) Base LVR Base loan amount / property purchase price. The base LVR is used to determine the LMI premium. If LVR <=80%, assumes that no LMI premium is payable (i.e. that the lender does not require the borrower to take out LMI). Capitalised LVR Capitalised loan amount / property purchase price Timing assumptions All recurring transactions are assumed to occur on a monthly basis at the end of the month. Mortgage repayments are assumed to occur immediately after the accrued loan interest has been charged to the loan. All months are assumed to be of equal length, and one year is assumed to contain exactly 12 months. Therefore, this assumes that a year has 364 days.