Mortgage Repayment Calculator

A mortgage repayment calculator may prevent you from taking out a mortgage loan that exceeds your financial resources. This simple, free tool helps you figure how much your monthly payments will be if you purchase a property of a certain value, with a certain deposit percentage, interest rate and repayment term. You can change the values in an online mortgage repayment calculator to see if you might save money by making a larger deposit or finding better deals on mortgage rates.

Once you've purchased a house, repayment may take 25 years or more, depending on the term of your loan. Because repayment is a significant, long term commitment, it pays to gauge your ability to meet this obligation using a mortgage repayment calculator before you sign a contract. With a mortgage repayment calculator, you can estimate your monthly obligations within minutes and possibly avoid assuming a financial burden that you couldn't afford in the years ahead.

Mortgage Repayment and Income

Your income plays an important role in determining how much money a bank, building society or credit union will lend you in order to finance a house. Lenders consider not only your current income, but your credit history and your potential future earnings when they decide whether to offer you a loan. When you compare the figures from your mortgage repayment calculator to your projected future earnings, your calculator may give you a fairly accurate idea of whether you'll be able to afford a loan under the proposed terms.

As you're using your mortgage repayment calculator, keep in mind that your personal financial situation will most likely change over the next 25 years. You and your spouse may continue to increase your salary and make more money in the years to come. On the other hand, one of you may lose a job, suffer a serious injury or be diagnosed with a critical illness. You may decide to have another child, which would increase your monthly outgoings.

In addition, mortgage interest rates will change over the course of your mortgage. The calculator allows you to change the rate of your mortgage, which will increase or decrease the amount of your payments. If you start off with a fixed, capped or discounted mortgage, these rates won't apply for the entirety of your loan. After the first 1 to 5 years, mortgages generally revert to the standard variable rate, or SVR, which your lender can change at any time. Try adjusting the rate on the calculator to see how different percentages would affect your monthly budget.

A calculator can be an extremely valuable tool when you're in the first phases of shopping for mortgages. You can use the calculator as a guide in deciding whether you should increase the amount of your deposit in order to lessen your financial obligations in repayment. Most lenders require a cash deposit of 5 to 10 percent of the home's total value. However, if you're able to pay a larger deposit by taking out a low interest loan or borrowing money from a family member, you may pay less in interest over the course of your repayment.

Remortgaging Your Home

After you've purchased your house and you're comfortably settled in your new home, continue to use your mortgage repayment calculator periodically to determine whether you're still getting the best deal on your interest rates. If you're paying the standard variable rate, or SVR, your lender may adjust this number, using the Bank of England's base rate for monetary policy as a guide. The calculator can show you how much you might save if you were to continue to make repayments based on lower interest rates.

When you sign a contract to buy a home, you agree to pay the specified rates for a certain period of time, generally 2 years. After that time, you have the right to shop for a better deal if you feel that your monthly payments are too high. The numbers from your mortgage repayment calculator can tell you how much you could afford to pay under different terms. Before you decide to switch lenders, speak to your current lender about whether they would consider adjusting the SVR to make your payments more affordable.

Remortgaging is the process of transferring your current arrangement to a new one in order to achieve more affordable financing, reduce the term of your contract or switch lenders to save money. Switching lenders may involve fees and penalties; however, the benefits of having lower repayments may be worth the cost. The figures from your mortgage repayment calculator may help you and your lender agree upon new financial terms. If not, you are at liberty to compare offers from other lenders to find the best terms for you and your family.