How This Mortgage Calculator Works
A mortgage calculator is a must-have for anyone buying a home or remortgaging.
It helps you see your monthly repayments based on factors like loan amount, interest rate, and mortgage term.
Our calculator gives you a quick, accurate estimate of your payments.
You can also compare different repayment types, deciding between interest-only or repayment mortgages.
Experiment with various scenarios to understand how each option affects your monthly costs and the total interest paid over time.
How To Use This Mortgage Calculator
To get started, input the following details:
- The loan amount you wish to borrow
- The mortgage term, or how long you plan to repay the loan (usually 25-30 years)
- The interest rate – the percentage you’ll pay on top of the borrowed amount
- Your monthly payments
- Whether you’re looking at a repayment mortgage or an interest-only mortgage
After entering these details, hit ‘calculate’. The tool will then show you an estimate of your monthly repayments.
Once you’ve entered the details, the calculator will work its magic. ✨ It crunches the numbers to give you an estimate of your monthly repayments, including both the total repayments and total interest charged.
Feel free to experiment with different scenarios. What happens if you decrease your loan amount? Or if you shorten the mortgage term?
This will help you understand how various factors affect your repayments.
While this calculator is a great starting point, it’s not the be-all and end-all. Your actual mortgage offer might differ based on factors like your credit score, income, and the lender’s criteria.
📝Things To Consider
When using the mortgage calculator, there are a few important points to keep in mind:
- Accuracy is key – The results are only as good as the information you put in. Make sure you’re using correct figures for reliable estimates.
- It’s not a crystal ball – The calculator provides an estimate based on the information you provide. Your actual mortgage offer may differ.
- Your personal information is safe – These calculators don’t save your data, so you can experiment freely without worrying about privacy.
- It’s not an offer – Remember, this isn’t an actual mortgage offer. It’s a tool to help you plan and budget.
- Additional costs – The calculator typically doesn’t include other costs associated with buying a home, like stamp duty, solicitor fees, or property surveys.
- Interest rate changes – If you’re looking at variable rate mortgages, remember that your repayments could change if interest rates fluctuate.
What Do Your Results Mean?
The results from the mortgage calculator will show your estimated monthly mortgage repayments.
Here’s what they mean:
- Monthly repayment – This is the amount you’d need to pay each month to your mortgage lender. For a repayment mortgage, it includes both the repayment of the capital and the interest. For an interest-only mortgage, it includes just the interest.
- Total amount repaid – This shows you the total sum you’ll pay over the entire mortgage term. It includes the original loan amount plus all the interest. For an interest-only mortgage, it includes the total interest paid, with the original loan amount remaining at the end of the term.
- Total interest paid – This figure represents the total amount of interest you’ll pay over the life of the mortgage. It can be eye-opening to see how much interest adds up over time!
These results can help you:
- Budget effectively – Knowing your potential monthly repayments helps you plan your finances.
- Compare different scenarios – Try adjusting your loan amount or mortgage term to see how it affects your repayments.
- Understand the long-term cost – Seeing the total amount repaid can help you grasp the full cost of borrowing.
- Negotiate better – Armed with this knowledge, you can shop around for the best mortgage deals.
Digging Deeper: Mortgages Explained
Mortgages can seem complex and intimidating, but they don’t have to be.
Let’s break it down into bite-sized pieces so you can understand what you’re getting into.
Ready?
What is a Mortgage?
In simple terms, a mortgage is a loan used to buy property. 🏠
When you take out a mortgage, you’re borrowing money from a lender (usually a bank or building society) to purchase a home.
The property then serves as security for the loan. If you can’t keep up with repayments, the lender has the right to repossess the property.
What is a Mortgage Repayment?
A mortgage repayment is the amount you pay back to your lender each month. It typically includes two parts:
- Capital – This is the amount you’re paying back on the original loan.
- Interest – This is the cost of borrowing the money, calculated as a percentage of the loan.
How Does Mortgage Interest Work?
Mortgage interest is the cost of borrowing money to buy a property.
It’s calculated as a percentage of the loan amount and can be fixed (staying the same for a set period) or variable (changing in line with the Bank of England base rate or the lender’s standard variable rate).
The interest rate you’re offered depends on several factors, including:
- Your deposit size
- Your credit score
- The type of mortgage you choose
- The property you’re eyeing
- Current market conditions
Remember, even a small difference in interest rate can make a big impact on your repayments over the life of your mortgage.
Who Is Eligible for a Mortgage?
In the UK, mortgage eligibility depends on several factors:
- Age – You typically need to be at least 18, and many lenders have upper age limits.
- Income – You need to prove you can afford the repayments.
- Credit history – A good credit score improves your chances.
- Deposit – Most lenders require at least a 5-10% deposit for residential mortgages. And 25% or more for buy-to-let mortgages.
- Employment status – Stable employment is preferred, but there are options for self-employed individuals.
- Residency – You usually need to be a UK resident.
Types of Mortgages
There’s no one-size-fits-all when it comes to mortgages. Here are some common types:
- Fixed-rate – The interest rate stays the same for a set period.
- Variable rate – The interest rate can change.
- Tracker – The rate tracks a particular base rate, usually the Bank of England’s.
- Interest-only – You only pay the interest each month, with the capital due at the end of the term.
- Repayment – You pay both interest and capital each month.
- Offset – Your savings are used to reduce the amount of interest you pay.
- Discount – This offers a discounted interest rate for a set period.
- Capped rate – The interest rate can rise and fall, but will not exceed a specified upper limit.
- Flexible – This lets you make overpayments, underpayments, or take payment holidays under certain conditions.
- Cashback – This offers a cash lump sum upon taking out the mortgage.
>> More about Mortgage Types
How Much Can I Borrow?
Lenders typically offer 3-4.5 times your annual income, or combined income for joint applications. However, this can vary based on:
- Your income and outgoings
- Your credit score
- Your deposit size
- The lender’s criteria
Remember, it’s not just about how much you can borrow, but how much you can afford to repay comfortably.
To see how much mortgage you can afford, use our mortgage affordability calculator here.
What Are the Fees to Get a Mortgage?
Getting a mortgage involves more than just the loan itself; there are several fees to consider.
Fees before completion:
- Arrangement Fee – This is charged by the lender for setting up the mortgage. It can usually be added to the loan amount.
- Typical Cost: £0 to £2,500
- Paid to: Your lender
- Booking/Reservation Fee – This fee is for securing a specific mortgage deal, such as a fixed-rate or tracker mortgage.
- Typical Cost: £100 to £300
- Paid to: Your lender
- Note: Not all lenders charge this fee.
- Mortgage Account Fee – Covers the costs of setting up, maintaining, and closing your mortgage account.
- Typical Cost: £100 to £300
- Paid to: Your lender
- Telegraphic Transfer Fee – Also known as the CHAPS fee, this covers the cost of transferring mortgage funds to the seller’s solicitor.
- Typical Cost: £25 to £50
- Paid to: Your lender
- Valuation Fee – This is for the lender to assess the value of the property. It is different from a survey.
- Typical Cost: Around £300, but can be higher
- Paid to: Your lender
- Conveyancing Fee – Covers the legal work required to buy a home, including local authority searches.
- Typical Cost: £800 to £1,500
- Paid to: Your solicitor
- Broker Fee – If you use a mortgage broker, they may charge a fee for their services. Some brokers are fee-free.
- Typical Cost: £0 to £500, but can be higher
- Paid to: Your broker
- House Survey Fee – This is for a detailed inspection of the property’s condition, recommended for older properties.
- Typical Cost: £400 to £2,000 depending on the survey level
- Paid to: Your surveyor
- Own Building Insurance Fee – Charged if you choose a building insurance policy from another provider instead of your lender’s.
- Typical Cost: £25 to £50
- Paid to: Your lender
- Higher Lending Charge – This is applicable if your deposit is small. It insures the lender if you default on the mortgage.
- Typical Cost: Usually 1.5% of the mortgage amount
- Paid to: Your lender
Fees after completion:
- Early Repayment Charges (ERC) – If you repay your mortgage early or switch lenders, you might incur this fee.
- Typical Cost: 1% to 5% of the early repayment amount
- Paid to: Your lender
- Missed Mortgage Payment Fee – If you miss a payment, the lender may charge a fee.
- Typical Cost: Varies by lender
- Paid to: Your lender
- Exit/Closure Fee – Also known as a redemption or mortgage completion fee, this is charged when you close your mortgage account.
- Typical Cost: £75 to £300
- Paid to: Your lender
Government Fees:
- Stamp Duty Land Tax (SDLT) – A tax on property purchases over £250,000. First-time buyers may have different thresholds and reliefs.
- Standard Rates:
-
Property Price (£) SDLT rate £0 to £250,000 Zero £250,001 to £925,000 5% £925,001 to £1,500,000 10% Over £1,500,000 12%
-
- For First-Time Buyers:
-
Property Price(£) SDLT rate £0 to £425,000 Zero £425,001 to £625,000 5% Over £625,000 Standard rates apply
-
- Standard Rates:
- Land Registry Fee – Required to register the property in your name.
- Typical Cost: £0 to £500, depending on the property price
- Paid to: Land Registry (via your solicitor)
Knowing these fees can help you budget more accurately and avoid any unexpected costs when buying your home.
Always ask your lender or solicitor for a detailed breakdown of the fees you will need to pay.
What Documents Do I Need?
When applying for a mortgage, you’ll typically need to provide:
- Proof of income (payslips, P60s, accounts if self-employed, tax returns, etc.)
- Proof of income/affordability (3+ months of bank statements)
- Workings for any bonuses/commissions
- Proof of deposit source (savings, gift letter if family helped, etc.)
- Proof of identity (passport, driving licence)
- Proof of address (utility bills, bank statements)
- Details of any debts/loans/credit commitments
- College transcripts if you’ve recently graduated
- Cost breakdown for the property
- Hired conveyancer/solicitor details
- Divorce/separation paperwork if applicable
Tips To Boost Mortgage Approval
If you want to increase your chances of mortgage approval, try these tips:
- Improve credit score. Ensure you have a good credit score by checking your credit file from the three main credit reference agencies: Equifax, Experian, and TransUnion. Correct any errors and ensure your details are up to date.
- Save a bigger deposit. The larger your deposit, the less risk you pose to the lender, making you more likely to be approved.
- Check your credit report. Regularly review your credit report for any inaccuracies or issues that could negatively impact your score. Correct any errors promptly.
- Reduce your outgoings. Minimise unnecessary spending to show lenders you can manage your finances well. Lenders will review your bank statements to ensure you can afford mortgage payments even if interest rates rise.
- Get your documents in order. Organise your paperwork, including proof of income, bank statements, and identification, to streamline the mortgage application process.
- Sort out your accounts. Close any unused credit accounts and ensure all active accounts are linked to your current address.
- Delink financial ties with your ex. If you are still financially linked to an ex-partner, their credit history can affect your application. Contact credit reference agencies to unlink your accounts.
- Register on the electoral roll. Being on the electoral roll proves your residency and can positively impact your credit score.
- Pay all bills on time. Consistently paying bills on time demonstrates reliability to lenders.
- Avoid dipping into your overdraft. Regularly using your overdraft can indicate financial instability. Aim to stay out of your overdraft for at least three months before applying.
- Avoid multiple applications. Repeated mortgage rejections can damage your credit score. If rejected, check your credit file and seek advice before applying again.
- Consider a mortgage broker. A good broker can offer expert advice and access to a wider range of mortgage products, increasing your chances of finding a suitable deal.
How To Get a Mortgage?
Ready to take the plunge? Here’s how to get a mortgage:
- Get an Agreement in Principle – This gives you an indication of what you could borrow.
- Find a property – Start house hunting!
- Choose a mortgage – Compare different types and deals.
- Submit your application – Provide all necessary documents.
- Property valuation – The lender will assess the property’s value.
- Receive your mortgage offer – If approved, you’ll get a formal offer.
- Complete the purchase – Your solicitor will handle the legal bits.
>> More about Mortgage Application
The Bottom Line
A mortgage calculator is a brilliant starting point, giving you a clear snapshot of affordability and how different factors affect your repayments.
But remember, this is merely the beginning.
Each person’s financial situation is unique. What suits one may not suit another. It’s crucial to do your homework, compare options, and seek expert advice when needed.
Consider a whole-of-market mortgage broker. They have access to a broad range of mortgage products, beyond what’s commonly advertised.
This allows them to tailor options to your specific needs, potentially saving you both money and time.
Good brokers are experts who streamline the process, help you understand the fine print, and make the journey smoother and more efficient.
If you need a trusted broker, contact us. We can connect you with a qualified mortgage broker to find the best deal for your situation.
Whether it’s your first home, a remortgage, or planning a move, a skilled broker can help you secure the perfect mortgage.
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