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Benefits of using a Mortgage Calculator
A mortgage calculator can be crucial for people who are home buyers however what are the benefits of using a mortgage calculator? Certainly, they are fantastic if you are looking to buy a home and want to check your financial situation. However, while it is nice to think that people can buy a house without having to deal with a mortgage, most people who buy a home require a loan. Certainly, the numbers and equations in obtaining a mortgage are enough to confuse anyone. Therefore, many people talk to their mortgage broker or lender to try to figure out exactly how much a mortgage will cost them along with the monthly repayments. However, some people use mortgage repayment calculators as a first step in property purchase before making arranging appointments for a mortgage application.
By using a home loan repayment calculator, you can calculate the home loan payments, costs, interest rates, and the amount of interest payable. There are various calculators which can help you with a variety of calculations.
What Calculators are available?
There are calculators available for almost any purpose you can imagine, below is a list available for mortgage purposes.
- Firstly, the Debt Consolidation Calculator – to work out the benefits of consolidating your debts into a single loan payment.
- Secondly, a Cost Calculator – These are used to work out how much it’s going to cost you to buy your house.
- Thirdly, a Mortgage Repayment Calculator – to calculate what your repayments are going to be. However, the payment is calculated based on the interest rate so therefore the actual repayment cannot be certain until you are advised of the interest rate.
- Also, the Borrowing Power Calculator – is used to work out your maximum loan amount using your income. However, this is a very general calculator. The only definitive way to assess this is to speak to your lender or mortgage broker.
- Finally, Car loan calculators are used to calculate a car loan payment. Therefore, including any balloon payment, loan term, and interest rate. However, as car loan lenders weigh heavily on the applicant’s credit score a credit check should be obtained. Certainly, a car loan calculator can still give a generic idea of repayment.
Know What You Can Afford
The first significant benefit of a mortgage calculator is the ability to estimate what you believe you can afford as a repayment. However, while many people can understand what they can afford as far as monthly payments are concerned, they usually don’t factor in risk factors over a long period of time such as if a partner has a baby and loss of that income.
The mortgage calculator gives you the ability to play with the interest rate, amount of deposit, and loan term to figure out what loan amount you can afford. Then the total interest payable for the loan amount & mortgage repayments you are seeking. However some people may also see they need to consolidate credit card debt to enable a lower payment and better affordability. Otherwise, may be able to work out the total interest payable that they are more comfortable with.
Work Out What Small Changes Can Do To Your Payment
The next benefit is the simple idea that the mortgage calculator allows you to play with the numbers at will to understand precisely how changes affect your monthly payment. Therefore, by playing with the different amounts, and loan terms of 30 years or even 25 years, you can figure out the best way to come to a repayment that you are comfortable with.
Find Your Price Range
When buying a house, people often find they are unsure of how much they can afford. How does Interest rate or deposit impact the price they can afford to pay for a house? What is the maximum purchase price? Some people believe they can pay a certain amount but can pay more. Being informed will allow you to buy better and give you an advantage when negotiating with the vendor.
Do Mortgage Calculators Have Limitations?
Mortgage calculators are a fantastic resource as a first step to securing a mortgage or buying a house as an owner occupier. The pure nature of a calculator is also its most significant limitation; there are many factors to consider in obtaining a mortgage that a calculator does not cover. For example, a calculator does not look into your creditworthiness or the impact a credit default has on the interest rate or the amount you can afford. It also does not consider or have the ability to work out exact loan costs for your particular situation. A Mortgage Calculator should be viewed as a first step asset to obtaining a mortgage and understanding the repayments. However, they do have their limitations.
When using a mortgage calculator, you can begin to educate yourself on what you can afford the necessary costs, and the benefits of various loan situations. You can have ready access to online calculators or even computer-based calculators prior to discussing with a lender or mortgage broker.
Calculators are great as a first step to obtaining a loan or a mortgage but know the limitations. Where possible, make a call to a mortgage broker or a lender as the next informed step to obtaining a mortgage. However, this is particularly true when calculating a debt consolidation for a tax debt or other debt or when trying to restructure a mortgage and work out a payment amount. You don’t want to go through the effort of failed applications if refinancing needs to be done quickly.