Mortgage Calculator

Thanks to the internet, it's no longer necessary to visit your local HSBC branch to work out the kind of repayment schedule you will face if you decide to take out a mortgage. Instead, there are a whole host of online resources available at the click of a mouse to help you decide how to go about financing your new home.

Using a mortgage calculator
For most prospective homeowners in the UK, taking out a mortgage of some kind - be it to finance the house in full or only partially - is more or less a prerequisite.
Mortgage calculator tools aim to tell you exactly how much you need to pay each month, thereby helping you to choose which property you should buy, as well as determine whether you will need to make any major lifestyle changes to help cover your bills.
There are four major pieces of information you need to hand when you use a mortgage calculator, namely:
• The price of the property you are planning to purchase.
• The amount you will be financing with your mortgage.
• The time period over which you will be paying off your mortgage.
• The interest rate of your bank. - this is really important as you will have to make a choice between floating and fixed interest rates. Research well for rates and expectations so that you choose the right rate for you.
Generic mortgage calculator tools can give you a generalised number based on the above, for more precise quotes you will need to visit the website of your lender. You can play around with the numbers to get a better idea of what to expect throughout the years.
They will then ask you for additional personal information such as the number of people financing the purchase and their annual salaries, allowing them to assess how much you can reasonably be expected to pay back on a month by month basis.
Reducing payments
If the mortgage calculator comes back with a scary figure, then don't be alarmed. There are several things you can do to reduce your monthly mortgage payments - and it doesn't have to mean abandoning your dream family home.
The most sensible way to bring these costs down is to spread your payments over a longer period. In some ways, this represents a greater financial commitment - since you will be paying more interest to the bank - but it puts less pressure on your monthly finances.
Another option is to sign up for an interest only mortgage. Here, instead of paying monthly instalments, you pay back your lender with a series one-off lump contributions. This affords you greater flexibility in terms of your repayment structure, making it perfect for those without a steady, month to month income stream.
Useful resources
The following links are useful as generalised mortgage calculators. As above, they will give you a rough idea of whether you can afford your target home.
But be advised that, without taking details about the annual salary and income patterns of you and your partner, they won't be able to produce any concrete figures.