Calculators of various sorts of this type need to be treated with caution, not because they are wrong but because you need to actually see whether the basic assumptions apply to you.
Generally speaking on lower incomes and cashflows these products on an off the shelf basis COST you money.
Why ? Because the interest rate of the LOC product is say 6.5 %. The basic loan with that lender may be say 6.0 %.
On a loan balance of 200 000 you will pay on average near 1000 more in interest in the first year. Unless you can continuously park
over 15 000 in that account, the increased rate cost is not even covered.
As with all financial products the bottom line is NOT the bottom line. Do your sums in detail and you might see that many a lender is stretching the truth in their advertising.
Similarly many lenders, especially non bankies encourage you to "compare". Issue is that commonly that comparison is neither fair nor valid comparing budget loans with fully featured offset and or Line of Credit products.
What I normally do is to look at the total cost of the loan over a seven year period for the entire loan amount.
This is similar to the AAPR or average annual percentage rate systems promoted by many non bankies. I look at the entry, ongoing and amortise the early exit fees if there are any.
Be aware though that then you compare a 100 % offset product with a 100 % offset product and not a cut price redraw. Or in your case an LOC with LOC. What the non bankies LOVE to do is to take their cut price loan and then compare it to the rack rate product of the big 4 banks. This is akin to taking a Hyundai Exel and Comaring it to a big family car.
While its a readily simple process it will take you a while to churn through.
The first decision to make is what product you actually need and that will take you some time to churn through. This is where an independent broker can clear the fog. Use their accumulated experience of their client base and their IP to help you select a product style or mix of styles. I suppose what Im saying is to choose a broker, not a product.
There is soooo much variability in the market place and in rates and in product that there is NO systemised method of choosing the right product. Thats because people use it and we all have different expectations, needs and wants.
Will try and sort out a direction to follow with the wife and review my current loan contracts to see if refinancing for the long term will encounter any early pay out penalties, in the long term they may be worth paying to get the structure right.