Mortgage calculator

Finding mortgage loan offers in the UK is not difficult. From newspaper advertisements to surfing the Internet, mortgage loans sporting low interest rates and additional benefits to entice borrowers to sign up are literally everywhere. But, when a mortgage offer claims that it can save 'x' amount over the competition, how can you be sure just how much it will save you when applied to your own mortgage loan? Moreover, if the deal offered is short-term, how much will the offer's standard mortgage rates compare with the mortgage rates you are currently paying for your loan? The answer to these conundrums is to compare the mortgage offers against each other, and to do this we need a loan calculator mortgage calculator.

Making comparisons with a loan calculator mortgage calculator

A loan calculator mortgage calculator is a clever little web program that is freely available on many loan and mortgage related websites. The principal behind a loan calculator mortgage calculator is quite simple - input the amount of the mortgage loan into the calculator along with the interest rate applied to the loan and the loan duration, hit the 'submit' button and 'hey presto' you have a schedule of monthly loan repayments. So, for two or more mortgage offers you can enter the loan parameters into the calculator along with your mortgage balance and get an idea of what a particular mortgage offer will cost you each month, as well as what it will cost you in total over the lifetime of the loan.

To accurately compare your loan calculator results for different mortgage offers it is a good idea to print off each set of loan calculations from the calculator and make a side-by-side analysis of them. If the calculator you are using cannot handle multiple interest rates across the life of the loan then you may need to do several calculations to arrive at the final loan cost before making your side-by-side comparison. As an example, if you were to spend say 4 years on a fixed interest rate of 4.5%, and then change to a standard rate of 6.75% you will need to make two calculations - one at 4.5% to work out repayments across the first 4 years, and then a second calculation at 6.75% for the remainder of the mortgage term.

Aside from mortgage loan comparisons a loan calculator mortgage calculator can be used to work out how much of a mortgage loan you can afford in the first place. To do this simply choose a calculator that allows you to 'reverse' the calculation process by entering the repayment amount that you want to pay / can afford to pay each month and the interest rate. The calculator will take the loan input information and from it extrapolate the total mortgage loan you can apply for. Do bear in mind though that mortgage companies are rarely willing to lend more than 3.5 times your salary on a 75% mortgage or any loan greater than 75%.

Refinance now to save thousands on your mortgage

Death and taxes - two things you know are for certain in life. However, there is a third that is almost nearly as certain as those two - fluctuating interest rates. With a home mortgage being one of the largest purchases you will ever make, even the slightest decrease in the rate that you pay on the loan can save you thousands. For many of you, now may be the perfect time to refinance your mortgage and put thousands of dollars back into your pocket.

In the past decade the mortgage industry has become a highly competitive field. With recent events in both the mortgage industry and the U. S. economy, rates are changing rapidly. For many of us, we may be paying for more than we should on our mortgage and not even realize it. Indeed, many people never think about their mortgage over their years - a mistake that can cost them serious money. They just sign the papers and pay the monthly payment. However, during the 20-40 years that mortgage runs, interest rates will rise and fall - and the smart consumer knows to take advantage of these fluctuations.

Maybe you are thinking that it is too much hassle to refinance and not worth the time. Just think about this: If you took out your 30-year mortgage 5 years ago at 6.1%, that same mortgage may now be available to you for 5.45%. Although it may seem like only a small amount, 0.65% to be exact, that 0.65% adds up to over $3,400 you can put back into your pocket over the life of the loan. Ask yourself this; is 4-8 hours of your time worth $3,400? For most of us the answer is a resounding yes! If your average monthly payment is $600, this means you will chop an entire half-year off your repayment!

Another reason you may want to refinance is to get your mortgage handled by a different company than you are with now. Sometimes, for various reasons, our current mortgage lender doesn't meet our needs or provides below par customer service. You may wish to move your business to a local lender, or one that offers more options for repayment.

Some people find themselves refinancing to get rid of adjustable rate mortgages and other balloon payments. Thanks to the competitive market out there for mortgage notes, the average homeowner with decent credit will have no problem finding a mortgager who will refinance them at terms they can both agree on.

So as you sit down to pay your monthly mortgage bill as yourself these questions:

" Am I getting the best interest rate available for someone with my credit?

" Am I happy with the level of service my current mortgage holder provides?

" Do I have a mortgage payment that will go up in later years that I can refinance now to lock in a lower payment?

Each of these questions is good reasons to evaluate your current mortgage and consider refinancing. In the end, you may not only save a lot of money on your total house payments, but you may also end up getting better service with lower payments - something we can all enjoy!

The offset mortgage why is it growing in popularity

The biggest innovation in the mortgage market in recent years, the offset mortgage, is now starting to take a significant share of the market. Now, only six years after they were introduced, the offset and the current account mortgage account for 10% of all borrowed mortgage capital.

According to one of the UK's largest mortgage lenders, as many as 25% of existing mortgage holders could save money in the long run by choosing an offset mortgage. If you're one of those possible 25%, then it's important that you are aware of the facts.

What exactly is an offset mortgage?

Here's the concept: you borrow capital from the mortgage lender and you also have savings sat in another account. Instead of paying interest on your full loan and earning interest on your savings, you pay interest on the amount you borrowed minus the amount you have saved. For example, if you had Ј25,000 savings and a mortgage of Ј110,000, you would only pay interest on the sum total of debt, which would be Ј85,000. Your savings would not earn any interest on a separate level, they would only be linked to the mortgage.

So what's the big selling point?

The major advantage to this kind of mortgage, particularly where higher tax payers are concerned, is that you end up paying less interest. This transpires because you are not earning interest on the savings, and as you know, the taxman always takes a fair amount of that interest away from you. If you have significant savings, then you lose a lot to the taxman – but not with the offset mortgage. That's why this type of mortgage is so well suited to people that have to pay over 40% tax.

These calculations illustrate the potential savings:

Ј100,000 mortgage - 25 years

Interest rate - 4.69%

Ј20,000 deposit

Traditional mortgage interest payments - Ј85,351

Offset mortgage interest payments - Ј41,998

Saving - Ј43,353

With the offset mortgage you would also complete the mortgage after just 19 years and 4 months. This is because the monthly repayments are calculated without your savings being included in the equation – therefore you would overpay, and finish paying it off early.

On average, a standard rate tax payer could feasibly save Ј9,538 in tax and a higher rate taxpayer a considerable Ј17,341.

There's also the benefit of flexibility – the offset is a lot more forgiving than the traditional mortgage and you can overpay, underpay and take payment holidays without penalties.

If it's that great, why isn't everyone doing it?

Offset mortgages used to have high interest rates, putting many borrowers off at the first hurdle. But as this type of mortgage has started to take off, lenders are offering better and more competitive interest rates.

The interest rate is however, still considerably higher than with the fixed rate mortgage for example, and it's important that anyone considering an offset mortgage can be sure that the tax savings will cover the higher interest charge. It's the kind of calculation that can only be accurately provided by a professional mortgage adviser.

As a rule, the standard taxpayer must have savings of Ј20,000 to put against a Ј100,000 mortgage to make the offset worthwhile. A higher rate taxpayer would only need Ј10,000 to justify this type of mortgage. (These calculations were made in reference to an average 4.69% fixed offset rate, and a 4.49% tracker mortgage.) These figures will obviously change with the potential rise and fall of interest rates, and as we project, offset and traditional mortgage rates move closer together.

The many variations on the offset mortgage

Mortgage lenders, in their bid to win your business, offer different incentives that they hope will give them the competitive edge. The most common incentive is a free property valuation or free legal work. The banks have a head start as they can include your current account in the offset calculation as well as your savings, but other lenders will let you offset two different savings accounts. Others will offer a borrowing facility and a chequebook.

The interest rate also varies considerably – from a 6-12 month fixed rate, to a tracker guaranteed to stay below the base rate for 6 months, or a tracker which tracks the base rate for a set amount of years, but also charges a minimal premium.

The amount you are borrowing compared to the value of the property will also affect the interest rate. At the moment one lender will give an interest rate of 5.6% for people that are borrowing less than 50% of the property value, whereas anything above that (up to 99%) will have an interest rate of 6.45%.

The concept may be easy for you to get your head around, but the sums won't be. See an independent mortgage adviser for individual advice tailored to your circumstances, it's the only way to be sure that the offset is best for you. However, we think that if you have savings and pay interest at a higher rate, you'll be onto a winner with the offset.

*Indicative figures correct as at 11/05