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Mortgage Calculator
Why you should't use a mortgage calculator
A website offering a mortgage calculator can seem like a great place to start. The mortgage calculator is designed to show you how much you can borrow based on your earnings and also give you a monthly payment amount. So why isn’t this good enough?
In much the same way that a mortgage comparison website will work on the bare minimum of the information you put into it, sometimes not even taking into account all of the information that you have just painstakingly entered yourself, the mortgage calculator is a very basic tool. Yes, it will allow you to put in your income and some of your outgoings, and if you have a good memory and are fairly well organised, you might have worked out some of your main outgoings. If there is enough space to put your sums in, the mortgage calculator will then work out an approximate amount that you can borrow and an equally approximate amount that you would look to be paying out on your mortgage every month.
Be careful ! It used to be the case that lenders would look at your before tax earnings (if employed and not self-employed) and times this figure by 3, 4 or even up to 6 to come up with your total borrowing potential. This is a rough “rule of thumb” approach and not favoured these days. You can imagine that this often resulted in amounts that you could not afford – you don’t take home “before tax” money ! Lenders now look to your monthly “affordability” and so will look at your after tax earnings and not just after tax but after your credit commitments including credit cards, loans, car finance, HP agreements, after your council tax, pension schemes, grocery bills, clothing bills, dental bills............ it is highly doubtful that a mortgage calculator will have anything like the level of detail you need to work out a realistic budget for you on a monthly basis.
You really would be surprised at the level of detail that your broker will be going into if you think a mortgage calculator can do this job for you. It simply can’t. Your broker will want to be confident that your “rule of thumb” borrowing works out and that you can live comfortably not only with the mortgage payment but with all of your other monthly bills, protection and – let’s face it – have a bit of a lifestyle too !
A mortgage calculator is a blunt instrument
We’re not saying don’t use a mortgage calculator but be aware that it is a blunt instrument and you shouldn’t base your house shopping or budget generally on what a mortgage calculator gives you. Our brokers will work out carefully what you can borrow and, more importantly, what you can comfortably afford to pay back each month.
In essence, our Mortgage Broker can do far better than any Mortgage Calculator.
Just complete the form and we will do the rest.
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