UK Mortgage Calculator.

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Should you want to plan how much you are able to borrow in terms of monthly payments, and which interest rate you can afford, you can use a mortgage calculator. This will tell you what your monthly payments will be as well as other information you may find useful once you have entered some variables.

Simple mortgage calculators will ask you to enter the interest rate you have to pay the term in which you wish to repay the mortgage and how much you want to borrow. You may need to put in more details of the mortgage such as perhaps an initial interest rate deal should there be a discount or fixed period followed by the standard variable rate, should it be a more sophisticated calculator. Your monthly repayments can then be worked out from the amount, rate and the term. It may tell you what the repayments are on an interest only as well as repayment basis.

Repayments on a repayment mortgage will start off by paying off a low proportion of capital and a large proportion of interest. After a year you may find that not a great deal of your mortgage capital has been paid off after the first year of payments. Some mortgage calculators will show an analysis of how much capital and how much interest is paid off each year from a repayment mortgage. This could be graphically represented or it could be shown in tabular form.

There are quite a few uses for a mortgage calculator. You can find out how much you are able to borrow by comparing the amount of your monthly repayments to your income and see how much your repayments eat into your income. This can be particularly useful should you have a mortgage product where there is an initial discount or fixed rate period followed by the mortgage moving onto the standard variable rate. At the end of the initial period, you may be earning more so the mortgage reverting to the standard variable rate may not be a problem, but it could be worth finding out what income you would need to have to make the mortgage payments comfortable.

In most people's experience, comfortable mortgage payments are when they take up 33% of your income. In London, many people's monthly payments end up being more that 33%, particularly if they are a first time buyer, where they may not be earning much money. In this case they may end up paying up to 40% or even 50% of their income on their mortgage payments. A calculator can help you find out what you would be able to borrow should you only want to pay 33% of your income in payments.

 

 

 

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