Before you even start looking at properties, the first thing you need to know when you are thinking about buying a home is how much you can borrow. A good way to work this out is to use a repayment mortgage calculator into which you will put how much you are thinking of borrowing and how long for – giving you a final total of how much your monthly repayments will be and allowing you to decide whether to change the loan amount or repayment term until the amount suits you. You can find a free mortgage calculator online and often sites will have more than one site to give you the option to compare mortgage types. Compare a standard mortgage calculator with an offset mortgage calculator to see if there are more benefits going one way or the other and so on.
When it comes to knowing how much you might want to borrow in the first place, it does depend on factors such as your credit history and whether you are making a single or joint mortgage application but the basic rule of thumb is that borrowers can expect to borrow around three to four times their annual salary (including any other income than just your monthly wage). Those with the best credit score can expect the highest levels of this, whilst people with bad credit or a low wage may want to look into different types of mortgage or buying with a friend or partner to get enough to buy the kind of home they are looking for.
Even if you have your dream home in mind and have managed to push your lender to lend you more than originally stated you really should think through the consequences of borrowing more as this is a long term financial commitment which, if you find later down the line you cannot pay it, could cause you significant financial difficulty and might even end in the lender claiming your home back from you.
Try to borrow modestly and make the most of a cheaper property. While property prices are still low the chance of your property being more expensive once your mortgage matures is high, and this is when you have the opportunity to trade up for a more expensive home. Paying off your mortgage on time and in full monthly will also give you a higher credit rating and the chance to borrow more the second time around.
Mortgage Calculator: Related posts
© 2012 All rights reserved. Reproduction in whole or in part without permission is prohibited. See our copyright notice.
This entry was posted in News by mortgage calculator. Bookmark the permalink.