Basic Mortgage Calculator
Before you take out a mortgage it is vital to be sure you can afford the repayments. Use our handy calculator to give you an idea of the likely monthly repayments and total cost of the mortgage. Simply enter the amount you want to borrow, the interest rate of your chosen mortgage product and the length of repayment term. Our calculator will do the hard work for you, giving you details of the likely monthly repayments. You can use the calculator as many times as you need to – try checking what impact reducing the mortgage term has on the monthly instalments and the total amount to repay, for example.
What is a mortgage?
A mortgage is the loan most of us take out when we buy our home. Unlike most personal loans, it is a ‘secured loan’: this means that it is secured against the property. In return for lending you money, the mortgage company takes a charge over your property as security. If you don’t pay back the money as it becomes due the lender can use this charge to repossess the property and sell it to recover the amounts due. The lender takes a charge due to the large sums of money involved, as it helps to reduce the risk to them should you fail to keep up with your repayments.
When you take out a mortgage, the lender gives you the amount you have borrowed in a lump sum, which you then pay back in instalments each month. The amount that you pay back will usually include part of the original capital sum and the interest due on it. Use our calculator to check how much the monthly instalments will be for your mortgage.
How much can I borrow?
How much you can borrow will vary significantly between different lenders and upon your own individual circumstances. It is no longer possible to calculate how much you can borrow purely as a multiple of how much you earn, due to rules brought in since 2017 by the Financial Conduct Authority. As well as looking at your income, mortgage providers will look at your outgoings and carry out an affordability assessment. Your lender will also carry out what is known as a ‘stress test’, checking that you will still be able to meet your mortgage repayments if, for example, interest rates rise or you have a baby. Since 2017 mortgages of more than 4.5 times income have become very rare.
How much can I afford?
When you check how much you can afford in mortgage repayments, first of all set out all of your sources of income which might include employment, self-employment and investments. Then you will need to set out all your current outgoings and those which you can foresee you will need to meet in the future. Don’t forget to include insurance, other loans and utility bills as well as your day to day living costs.
Finally, try as much as you can to plan ahead and consider how you would meet your mortgage if your circumstances changed. It is important that you are able to keep up the mortgage repayments because if you do not, you could lose your home. A good rule of thumb is to make sure that you have savings to cover at least three months’ outgoings including the mortgage instalments.
Can I get a Mortgage with bad credit?
If you have a bad credit rating it is still entirely possible to get a mortgage, however you will have a smaller choice of lenders and you may well have to pay a higher interest rate. You might also need to have a significantly larger deposit.
You will need to have a mortgage deposit of at least 5% of the property price. The mortgage will cover up to 95% per cent of the price, leaving you to pay the remainder from your own funds. Don’t forget that you will also need to pay your conveyancer and other moving costs. In general, the larger your deposit as a percentage of the purchase price, the lower the interest rate you are likely to be able to achieve on your mortgage.