What is a mortgage calculator?
There are three main questions that many clients have when they first start to consider purchasing their first property. Our mortgage calcualtors are designed to help answer these questions.
How much can I borrow?
Before you start to look at properties it pays get an accurate idea of how much you could potentially borrow based on your income and expenditure details. This will allow you to start looking for properties in a realistic price range. An affordability calculator is useful for the first step however to get a truely accurate number it's best to book an appointment with a professional who can confirm what income is allowable and run multiple calculators with various lenders. Some lenders will allow you to use benefits, overtime or maintenace towards the maximum loan amount and others won't, there can be a huge difference between one lender and another as to how much you can borrow.
How much will it cost?
Once you have figured out how much you can borrow it's also worth while working out how much it is likely to cost / month. You may be able to borrow a certian amount of money from one Bank or another but if your not comfortable with the monthly payments or the potential monthly payments should interest rates increase you may want to consider putting down a larger depsoit or purchasing a cheaper property.
What other fees are involved?
Stamp duty is one additional expense that is often overlooked when considering a new purchase. The majority of first time buyers will have no stamp duty to pay as the threshold is currently £425,000 (16th March 2023) if the purchase price of the property exceeds £425,000 there will be an additional cost. If you are moving to a bigger property you will be liable to pay stamp duty if the value of the new purchase exceeds £250,000 and if you are purchase a second residential property there will be a flat rate on the whole value of the property plus the standard rate.
How is a mortgage calculated?
The maximum amount you will be able to borrow depends on your income and monthly outgoings. Lenders will take a variety of different income sources into consideration. Your main income will most likely be your salary however some lenders will allow you to use government benefits, bonuses, overtime or child maintenance for this reason the maximum loan from one lender to another can vary greatly.
The monthly payments on a mortgage are soley determined by the interest rate, term of the loan and the amount borrowed. All lenders in the UK use the same calculation to work out the monthly repayment amount.
Remember that affordability isn't the only factor that a lender will consider when assessing your application, you will also have to demonstarte that you are credit worthy by having an acceptable credit history. The majority of lenders automate this process on the completion of an agreement in principle. Just because you have been declined by one lender doesn't mean that you will be declined by all of them. If you are struggling to get accepted it's best to speak to a professional.