Receive regular updates via email

Make smarter decisions with home loan calculators

Mortgage payment calculations are based on complex mathematical formulas, and fortunately there are many options for finding calculators to make this mathematical process easy and painless.

By using a mortgage calculator, it becomes very easy to know the monthly payments you need to make, and very easy to see what happens to your payments when you change key values like the amount of the loan, the number of payments, and the interest rate.

Types of mortgage calculators
There are two different types of mortgage calculators, online calculators and traditional physical calculators that have built-in functions for computing principal and interest payments. The online mortgage calculators are mostly used by the borrowers, and real estate and mortgage professionals usually prefer using the physical ones.

You’ll need nothing more than an Internet connection to be able to access the online mortgage calculators. They are available free of cost and are very easy to operate. You’ll just need to put in the necessary information, usually the amount of the loan, the number of payments, and the interest rate.

The most common types of mortgage calculators include the following:

  • Monthly payment calculator – It helps calculate your monthly payments easily and assists you when you’re thinking of taking out loans.
  • Interest only calculator – You’ll know the amount of interest you need to pay every month. The total interest for the term can also be calculated.
  • Amortization schedule calculator – It helps you cut down your loan term by doing calculations on the principal amount and interest rate of your loan.
  • Bi-weekly payment calculator – This calculator uses an accelerated bi-weekly mortgage payment method and helps you save money. Get to know the difference between monthly and bi-weekly payments with the help of this mortgage calculator.
  • Adjustable rate calculator – Say goodbye to uncertainty with this calculator. Know about the changing interest rates and how it is going to affect your mortgage payments.

The benefits of mortgage calculators
Mortgage calculators are beneficial in several ways when you want to refinance mortgage or calculate your debt payments:

  • They let you know about your affordability.
  • They will tell you the time it will take to pay off your loan completely.
  • They will help you learn about other better payment methods.
  • They will let you choose the most cost-effective payment method.
  • They will help you get the most favorable rates on mortgage refinances.

Using a mortgage calculator prior to making any mortgage related decision is important. The calculations give you an idea about the present market conditions and how you can benefit yourself the most.

Why now might be a good time to get a mortgage

Deciding if getting on the property ladder is the right thing to do in these confusing economic circumstances can be a stressful time, particularly if you are a first time buyer.

Lenders have been reluctant to give out mortgages to the extent they did during the housing boom, making it difficult to obtain finance to get started on the property ladder.

The housing market has stalled, yet house prices are still predicted to fall further during 2011, making this year an appealing time to try and make those first steps.

If you are unsure what you are able to borrow given your personal circumstances, a mortgage calculator will help you work out what you can afford to borrow and comfortably pay off.

Deciding to buy is always a risk and you will have to make the decision to buy now and risk further price falls, although if you plan to live in the house for a long time, falling prices will pose less of a risk.

Predicting the right time to buy is only part of the equation. You still need to find out if you will be able to secure a mortgage and this will depend on both the current market and your personal financial circumstances.

Before you start contacting lenders, check out a mortgage calculator to help you decide what size and type of mortgage is affordable for you and then what type of house you can purchase for that price.

Mortgage lending has been at an all time low in the last year as lenders have become much more conservative and risk adverse, but if you are able to meet some strict criteria, you may be able to secure a mortgage.

A good credit history and a substantial deposit, of at least 10%, but ideally up to 25%, will go along way to making you more attractive to mortgage lenders.

The tricky decisions don’t stop there. If you are fortunate enough to secure a mortgage with a combination of a good deposit and positive credit history, you then need to decide whether a fixed rate or tracker mortgage is right for you. A mortgage calculator will help you compare repayments.

There may be costs that are not mortgage related, but that you may have to pay up front. While the typical borrower may rely on their their standby cash in their checking or savings account, using a pay day loan service may be useful, but only if you intend to pay off the loan very quickly.

Even though the base rate is currently at an all time low of 0.5%, making a tracker mortgage seem attractive, these low rates are not likely to remain forever. You will need to consider at what point a rising interest rate make it a struggle for you to pay off your mortgage.

It may be a more financially comfortable option for you to opt for a fixed rate mortgage and be certain of what your monthly repayments are going to be.

You will pay more, but it may be the difference between being able to keep up repayments, or defaulting on your mortgage should interest rates soar in the future.

The credit crunch has made mortgage lenders much more conservative than during boom times when you could get a mortgage with no deposit.

Criteria are much stricter, but if you are in a good financial position, it should not be impossible to find a good deal on today’s market.

Of course everyone’s circumstances are different, so good independent financial advice is crucial to ensuring you embark on a mortgage you can realistically afford.