Navigating the complexities of mortgages can be daunting, especially when it comes to working out the monthly payments and how much you can afford, but using a mortgage calculator can significantly simplify the process. Whether you’re a first-time homebuyer or looking to refinance, understanding how to use a mortgage calculator effectively can help you make informed financial decisions. Here’s a comprehensive guide to help you get started:
What is a mortgage calculator?
A mortgage calculator is a digital tool that estimates your monthly payments and the total interest you will be required to pay. To estimate the payment, you will need to input some key details:
- The amount of your mortgage payment
- The number of years to repay
- The interest rate
- Your mortgage type
For the best results, try to be as realistic as possible about your present and future circumstances. Ensure the information you input, such as interest rates and additional costs, is also accurate.
You can find our mortgage calculator here.
Helping you make the right choices
One of the major benefits of a mortgage calculator is that it can quickly demonstrate how adjusting your repayments can affect your total mortgage cost, helping you make the best long term decisions for your circumstances.
For instance, by using the calculator you can see that increasing your monthly payment by £100, it reduces the total interest on a £500,000 30-year loan from over £696,000 to under £621,000 – saving about £70,000 in interest. Knowing this might lead you to rebudget a little now for larger benefits down the road.
Stamp duty calculator
You can also determine whether you are required to pay stamp duty and if so how much. Many factors go into this:
- Whether you’re a first time buyer
- If your property is a buy-to-let or second home
- If you’re replacing your main residence
- Are you’re a non-UK resident
It’s always important to do this along with your mortgage calculator, as you may need to include this in your overall home buying budget.
You can find our stamp duty calculator here.
Using a mortgage calculator empowers you with valuable insights into your potential mortgage obligations. By experimenting with different scenarios and understanding the financial implications, you can make informed decisions that align with your long-term financial goals.