How Mortgage Calculators Can Help You
A mortgage calculator helps you understand how much you will be paying on your mortgage. It’s a simple tool that ensures you can keep up with repayments.
Reason #1 – Know How Much You Will Be Paying
The cost of a mortgage is not always obvious when you apply for it. A simple way to check the numbers is to use a mortgage calculator.
Using a mortgage calculator helps you to get a better idea of your repayments. You can then take a step back and determine your budget.
To use a mortgage calculator, enter the price of the house. Add a realistic interest rate and the duration of the mortgage. Click on the calculate button.
Within seconds, you’ll see your repayments. Determine whether they are within your budget.
You can use a mortgage calculator before approaching a home loan provider. It will help you avoid rejected applications.
Reason #2 – Understand the Impact of Interest Rates
Interest rates can make an enormous difference to your monthly payments. With a calculator, you can see how different interest rates impact your repayments. This knowledge is useful before you approach a home loan provider.
If the house you want to buy costs $750,000 and you choose a 25-year mortgage, the interest rate will determine how much you pay.
With a 5% interest rate and no ongoing fees, your monthly repayments will amount to roughly $4,384.43. Compare this to a loan with a 4.5% interest rate and no ongoing fees, the monthly repayments would be around $4,168.74.
As you can see, even a small difference can bring considerable savings.
Competitive interest rates on your mortgage can make a big difference on your income. A mortgage calculator can show how significant that difference is.
Reason #3 – Choose the Right Duration for Your Mortgage
Monthly repayments come down when you lengthen the duration of your loan. With a mortgage calculator, you can determine the best mortgage term.
As above, for a loan with a 4.5% interest rate and no ongoing fees, you would be paying ~$4,168.74 per month over 25 years for a $750,000 house. However, if you pay $4,744,87 per month, you can shorten your mortgage term by 20 years*. This is assuming the same interest rate and repayment amounts for the life of the calculated period.
Based on your term, a calculator will show you what kind of monthly repayments you can expect.
Reason #4 – See What Mortgage Your Income Will Get You
Every home loan provider applies mortgage limits based on your income. The more you earn, the more you can borrow.
Finding out your mortgage cap is easy. Enter your income (and your partner’s) and your monthly commitments. Add any dependants, other regular sources of income and any outgoing expenses.
With a mortgage calculator, you will find out your price range.
Reason #5 – Compare Home Loans
Financial institutions offer many types of home loans. With mortgage calculators, you can find out which type of mortgage offers the best value for you.
Home loans can come as fixed rate mortgages and variable rate mortgages. A mortgage calculator can compare the two loans and help you to make the choice. Other loans like equity release and refinance deals can also be set against each other.
The information in this article is general in nature. Please seek advice from a licensed professional when making financial decisions.
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