Whether you are a first-time buyer or already a home owner looking for your next property, the first step to house hunting is establishing what you can borrow and therefore afford. You will want to know:
- Will I be eligible for a mortgage?
- How much will I be able to borrow?
- How much will the monthly repayments be?
While your credit rating may affect your eligibility the rest can be worked out with the use of mortgage calculators before it comes to actually applying.
There are different types of mortgage calculators, all of which can be performed quickly and will be useful before applying for a mortgage or house hunting.
- Mortgage calculator based on your earnings
This will give you an indicator of the amount you are likely to be granted based on income alone.
- Affordability calculator
This option is a little more in-depth. As well as taking in to account your earnings you will have the opportunity to input your regular outgoings. This helps paint a broader picture of your financial situation and will let you know the likelihood of being granted the calculation based solely on income.
- Mortgage repayments calculator
This takes the above figure/s, includes your deposit and a typical APR and calculates your likely monthly repayment figure.
Using mortgage calculators is a useful way of understanding your financial position, what you can afford to buy in terms of mortgage, and what you can afford in terms of monthly outgoings.
Remember that lenders will also look at your credit score so while the calculated figures are useful, without a cross reference of your credit history these numbers are not guaranteed.
If you suspect your credit rating may be low, or if you have little idea of your credit score, it is worth registering with a credit agency who will be able to inform you of this. They may also include how to improve your score, how to correct any errors and how to clear debts that may be negatively impacting your rating.