Mortgage Calculator: How Do I Use One?

Mortgage calculators of all types are to be found on the internet. If you feel you could benefit from using one, the best way to find one is to type in “mortgage calculator” into a search engine. Many mortgage lenders have a mortgage calculator on their sites.

Before you start using the mortgage calculator, you need to collect together all the information you will require. This includes your monthly income from all sources – salaries, interest payments on investments, etc.

Then make a list of all your essential monthly outgoings – gas, electricity, insurance, credit card payments and payments on any other loans. If you have a car, work out how much it costs you over a year – in petrol, servicing, tax disc, insurance and, if possible, in depreciation.

If you have an endowment mortgage and you want to use the mortgage calculator to predict whether the endowment policy will pay out enough to cover your mortgage, there is additional information you will need. This includes the maturity date of your policy; the bonus rate; the current sum assured; and the date of your last bonus declaration.

When you start using the mortgage calculator, there are two ways you can go about it.
1. If you have seen a particular property and want to know whether you can afford to buy it, you can enter the amount you want to borrow and the period of time over which you would like to borrow it, and the calculator will tell you how much the repayments will be. Obviously you will have to look at this in the light of your income and outgoings.
2. Maybe you haven’t seen a property yet, but you want to know what price bracket you are looking at. In this case you can enter your total income and the mortgage calculator will tell you how much you can borrow. Some calculators will look at your gross income, others at your net income, which obviously helps you decide whether you can actually afford it or not. Some mortgage calculators will even allow you to enter your outgoings which is even more helpful.

Whichever of these two options you use, all you have to do is enter the information in the boxes when prompted on the screen. The you just click on “Calculate” and the mortgage calculator will instantly produce the information you require.

If you are looking for information on your endowment policy, the process is the same. You enter all the information required and click on “Calculate”. The mortgage calculator will then predict the final value of your policy.

The term “mortgage calculator” sounds a bit alarming. However, once you try it, you will find it really simple! And you will be amazed at the amount of work it saves you.

Sean Horton is a Director of Enhanced Wealth Limited who are a specialist mortgage broker with an online mortgage calculator