Whether you’re a first time buyer, thinking of remortgaging or simply looking to move house, the range of mortgage calculators available online are both a help and a hindrance. Without a doubt, they are incredibly useful in terms of working out how big a mortgage you could realistically afford, but with so many of these tools available how do you even begin to know which one to use?
The majority of all mortgage lenders, banks and building societies offer this facility on their website, so if you have a preference about which company you would like to take a mortgage out with, for example you already have financial history with them, then the first stop would be to visit their site. If however, you are unsure about where to start and it all seems a bit daunting you have three options:
1. Money Saving Expert
Whenever in doubt, Martin Lewis of Money Saving Expert is sure to help you out. The UK’s biggest consumer website, with approximately 15 million users each month, is committed to saving you money, cutting your bills and finding you the best deals. The site claims to be able to give you the equivalent of up to a 25% pay rise if you actively hunt out deals, follow advice and show more interest in your financial dealings. In terms of free online tools, it offers 9 different mortgage calculators along with expert, unbiased information.
- Basic mortgage calculator – Calculate the cost per month as well as the total cost over the life of the mortgage, which includes any fees and interest. The amount you can borrow for a mortgage is based on a multiple of your income, for which each individual lender will specify what this multiple is. Other factors taken into account will be your disposable income, deposit amount and any existing unsecured debt. This calculator bases its calculations on the simple income multiple method and provides extremely useful guidance, however it should only be seen as advice and any offers must be confirmed and agreed with the mortgage provider.
- Compare two mortgages – This tool allows you to compare both the difference in monthly payment and total costs between two different mortgage products. Really useful for if you are struggling to work out the difference between seemingly similar mortgage deals, although it does base its calculations on the assumption that interest rates will not change during the term and with the premise you will pay the fees upfront
- Overpayment calculator – This shows you the interest rate you would need to be getting on your savings in order to benefit from overpaying on your mortgage. Many mortgages have hidden T’s and C’s, which state you are unable to overpay on your mortgage each month without being liable to fees or a very high interest rate. This is a very handy tool, for if you believe your financial circumstances may change in the future.
- Offset mortgage v’s savings – One option is to place your savings into an offset account, which is linked to your mortgage, rather than the usual savings account. The benefit of this is that you won’t pay interest on the mortgage debt, however it isn’t always the best option and this calculator works outs whether it is right for you. All you need to do is find the best possible rates for both options, enter them into the calculator and see what it works out.
- Saving for deposit – This calculates the length of time you need to save for the deposit you require, which also includes lump sum and/or monthly top ups.
- Compare fixed rate mortgages – Just as the name suggests, this calculator compares two fixed rate deals and highlights the cost per month until the mortgage is repaid.
- Ditch your fix – Under the assumption the current rate won’t change, this takes into account early repayment charges and other associated fees and works out how much lower a rate you would need to benefit from ditching your fix.
- Repay mortgage with savings – This demonstrates the interest rate you would need to get on your savings in order to benefit from overpaying on your mortgage.
2. Mortgage Providers
As mentioned at the start of this article, many mortgage providers have free easy to use online calculators available on their website. It is wise to check out a few and see what the different outcomes are, how much they vary and how easy you find them to use. Remember to always verify the offer with the provider by either asking for confirmation by email or written letter or following up with a phone call. One good example of a bank that offers a great selection of mortgage calculators is Barclays. As well as offering a basic calculator that shows you how much you could borrow and how much repayments would cost, there is also:
- A mortgage base rate calculator, which shows you how the changing interest rates would effect your mortgage repayments,
- An offset mortgage calculator, which provides information about how this type of mortgage works and how it could help save you money,
- And a Barclays homeowner app, which calculates borrowing, gives you direct access to estate agents and mortgage specialists and promises to ‘find your dream home’
3. Comparison sites
Choosing which mortgage to go for is perhaps one of the biggest decisions you will have to make in your lifetime and one which should you get it wrong will affect the state of your financial situation in years to come. Comparison websites, like www.comparethemarket.com, do all the hard work for you by comparing the different types of mortgage and putting them into easy to understand categories, which in turn allows you to compare such factors as initial rate, initial period, rate type, overall cost for comparison and arrangement fees. The site makes it even easier by asking you to think about what you want from a mortgage. Do you:
- Want a better deal on your current mortgage – Remortgage
- Want to move to a new home – Moving Home
- Want to buy your first house – First Time Buyer
Based on this choice and the information you enter about your annual income it will show you an extensive list of providers of that mortgage type and all other relevant facts and figures. The only thing you need to do is compare the information and then contact the mortgage provider of choice.
Finally, an option which is probably more suited to someone who is financially savvy, is to sit down and essentially be your own mortgage calculator. Not for the fainthearted admittedly, but if you feel confident enough then go for it. You Tube also features lots of videos on ways to calculate your mortgage so it’s worth checking that out too.