Mortgage Calculator

When looking into taking out a mortgage many people will be attracted to the low repayment amounts evident in an interest only mortgage calculator. Although taking out an interest only mortgage can save you quite a bit of money on monthly repayments, when compared to the amounts you’ll see on a standard mortgage calculator, you will still need to have a repayment plan worked out in advance for paying back the capital investment as, when your mortgage matures, this amount will still be fully repayable. If you don’t have a plan in place or any way of getting hold of enough to pay off your full mortgage you will end up with a massive debt at the end of your repayment term.
With this in mind, should you still decide to go with an interest only mortgage you should be aware that lenders are much stricter with lending on this basis and it could actually end up costing you more money in the long run.
Most lenders will charge a higher rate for an interest only mortgage, and the interest you’ll pay on an amount that does not get any smaller is going to be consistently high, whereas the interest will decrease with a repayment mortgage as the amount owed gets lower.
Interest only mortgages are also capped at £500,000 meaning you will need to have the money to cover the rest of the house price should you want a property which is more expensive. A common way for borrowers to repay their mortgage debt was to sell the house at the end of the repayments terms and hope the house price had risen so that they would make a profit as well as pay off their mortgage. However, most lenders will not accept the sale of the property to repay the debt.
The best way to make sure you will be able to repay your mortgage at the end of the repayment term is to set up a savings or investment plan with your bank that will accrue enough money over the repayment term to pay for the cost of the home once the mortgage matures.
If this is not possible, you are better looking at another type of mortgage, or waiting until your financial position improves before you decide to buy. Having a larger deposit and more money to spend on repayments will mean you can get a far better deal on your mortgage anyway.

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