• Up-to-date Information
  • Thorough and Informative Quotes
  • 100% Free of Charge
Free Mortgage Quotes

Mortgage Rates Calculator

When you're trying to determine how much you should borrow and over how long, you need to use a mortgage rates calculator. Buying a property is amongst the most important financial decisions that you'll make, so you need to get it right. If you increase the term by too much, you'll end up paying more cumulative mortgage interest. On the other hand, if you reduce the term to minimise debt interest, you could jeopardise your chances of achieving affordability. If your repayments are too high from day one, you could find a possession order comes through your door for non payment. You should use your mortgage interest rates calculator to determine the optimal repayment term.

We all want to pay off our mortgage as quickly as we can, but a mortgage rates calculator can help to reveal certain economic realities that render this goal impossible. The Bank of England has set the base rate at 0.5%. That's just about as low as it can go, so how will you cope if interest rates were to rise? It was only in April 2008 that base rates were 5% [1]. Your loan rates calculator reveals that each 0.25% rise will add £41.67 per month to a £200,000 mortgage. This means that you won't be able to afford to make the repayments in a few years if you don't have any extra money available as a buffer at the end of the month. You may want to buy a house, but can you afford to?

Rising rental incomes in the buy-to-let sector tell us that it's harder to borrow money than it was a few years ago, but it's more difficult for a reason. No matter how much you want to buy a property, don't let your dreams blind you from the reality of a situation.

Mortgage Calculator and Repayment Terms

If your mortgage rates calculator reveals that you're likely to struggle, even with the maximum term, you should think carefully before investing in a property. In fact, new Financial Services Authority FSA rules mean that your lender is obligated to check that you can afford to pay. A broker is no longer allowed to make your figures balance by concealing the truth. It may have given them extra work, but many homeowners who fudged the figures have subsequently had their home repossessed by the lender. If your mortgage rates calculator reveals that the figures are tight, you can experiment with increasing the term. Having some money left over each month is vitally important.

However, your free mortgage interest rates calculator may reveal that you have plenty of disposable income. You have a well-paid job and this gives you the freedom to be able to reduce the term of your loan. You're free to enter different terms into the mortgage rates calculator to determine how quickly you can pay off the loan. You'll notice that, as you gradually reduce the term, the amount of capital that you're paying off starts to increase sharply. However, you'll also see that your monthly repayments are climbing just as fast. You may believe that it's worth going without a few extras, such as an overseas holiday, so that you can make some inroads into the amount that you owe.

Calculator to Reduce Mortgage Debt

If you want to get an £125,000 loan at 4.5% over 20 years, you'll need to pay the lender £790.81 per month. Your mortgage rates calculator reveals that you'll pay £64,794.81 of cumulative interest over the duration. However, if you reduce the term to 15 years, you'll pay £956.24 per month. Whilst this is significantly more for you to find, you'll only pay £47,123.49 of debt interest. Your mortgage rates calculator reveals that you'll pay an extra £165.43 per month, but you'll save £17,671.32 over the life of the agreement. Using your mortgage rates calculator to pay off the loan at this rate means that you'll be free from debt 5 years earlier and may be able to retire a bit sooner.

Even thought you're paying off the loan over the next 20 years, most remortgage deals are for no more than 5 years. If affordability becomes an issue, you can refinance at a later date. Perhaps you could use get a fixed-rate loan for 5 years so you know how much you need to find and then use your mortgage rates calculator to determine a more realistic level of repayment as interest rates start to rise. Millions of UK homeowners are taking advantage of the fact that it's cheap to borrow money to pay off extra on their loan each month. If you can use your calculator to reduce the principal at an early stage, you'll be free from debt several years earlier than would have been possible.

http://www.bankofengland.co.uk/mfsd/iadb/Repo.asp Accessed 2012-02-21

  • Application timeframe? *

  • Property description *

  • Property style *

Instant Quotes