What is a Mortgage Calculator?
In an effort to minimise stress and anxiety when applying for a home loan, more and more borrowers are turning to useful tools – many of which can be found online. These tools include mortgage loan calculators, a unique piece of software that can help a potential home loan applicant to calculate how much they can afford to borrow and the amount that they should expect to repay.
What is a mortgage calculator?
In the simplest terms it is a type of digital tool that can be found online and is often free to use. Some are very simple and include a couple of input fields to allow the user to add the most relevant information relating to their mortgage application. Others are more extensive and incorporate a range of advanced features instead.
Which one is right to use?
This will depend on the type of home loan that you are applying for – but generally speaking, most calculators will offer the same types of features and functions, albeit in a varying manner. For instance, if you already know the percentage of interest rates in the market right now from different banks, or you at least have a rough idea – then there will be an input field for that data.
And once you have the types of information that you need, such as the amount that you’d like to borrow, the duration that you want to repay what you owe and other similar factors – you’ll be able to add the data to the relevant fields and then click submit on the tool itself. Behind the scenes and within the calculator are advanced algorithms capable of comparing all of the info provided.
And once the calculator has done what it was made for – you’ll be presented with a breakdown of the amount that you can expect to pay back based on your repayment frequencies and duration.
What does this mean?
Some people want to pay back what they owe as quickly as possible which might require them to pay more, but in doing so they’ll also free themselves of their loan in a faster manner. Others might want to minimise their repayments in favour of having a little extra cash in the bank and fortunately, this is an option as well.
Some calculators will allow you to define your repayment frequency; from weekly and bi-weekly, through to monthly options instead. By playing about with the features of the tool you should be able to hone in on an option that suits your financial potential much more, allowing you to go into your application knowing which type of deal you’d like to apply for.
And for extra help, you could always enlist the services of a mortgage broker to help you to ensure that you get the right type of loan for your needs.