With so many costs and variables involved, it can be difficult to budget when it comes to paying for a home.
A mortgage calculator can be an indispensable tool when it comes to seeing what your monthly payments might look like under a range of different scenarios.
Our mortgage calculator can also calculate monthly household bills, so you will have a good indication of the overall costs of running a property.
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How is my monthly payment calculated?
How to use our mortgage and household bill calculator
You can find a step by step guide on how to use the calculator below. Keep in mind that this only applies to repayment mortgages, where you pay both principal and interest each month.
1. Enter the price of the property and the deposit (either as a percentage or as a lump sum). You will find it on the left of the screen. If you don’t have a specific property in mind, you can experiment with the numbers to see what you could afford.
2. Enter the interest rate. Use a comparison website or contact a mortgage broker to find out the type of rates available for your deposit level. You may already have a rate from a lender through an âagreement in principleâ mortgage.
3. Select a mortgage term. To calculate your monthly mortgage payment, enter the length of the mortgage in years. A maximum of 30 years is available on our calculator, but keep in mind that the duration offered to you will depend on your age and your situation.
4. Add the cost of monthly household bills. If you want to see the full monthly cost of running your home, add in the cost of major bills, including house tax and broadband. If you are unsure of this, the real estate agent or local authority may be able to help.
5. Check the details of your loan. Now that you have entered all the relevant information, the calculator will automatically populate your payment breakdown (on the right side of the screen). You can see not only your monthly payments, but also the estimated month and year before which you could pay off your mortgage if you continue to pay them in full.
If you want to see how much of your mortgage payments go to mortgage interest versus principal (what you actually borrowed), click on the âRepayment Scheduleâ tab. You can switch between annual and monthly view to see a breakdown of each monthly payment.
Free mortgage advice
Trussle is a 5-star Trustpilot-rated online mortgage advisor who can help you find the right mortgage – and do all the hard work with the lender to secure it. * Your home can be repossessed if you default on your mortgage payments.
What to consider when choosing a mortgage
A key factor when choosing a mortgage is your loan to value ratio (LTV). Your LTV is the proportion of the property’s value that you are borrowing as a mortgage. For example, if you buy a property for Â£ 200,000 with a deposit of Â£ 20,000 (10%) and a mortgage of Â£ 180,000, your LTV will be 90%.
Each mortgage product has a maximum LTV. Some are set at 60% – these will be the cheapest deals. First-time buyers generally borrow at LTVs of 90% or 95%. In general, the lower your LTV, the lower the interest rate you will pay. You should only apply for a mortgage if you meet the LTV conditions.
The interest rate on a mortgage dictates how much it will cost you to borrow money. The interest rate will be either fixed for a fixed period or variable. You may also need to pay an arrangement or reservation fee to secure your mortgage, as well as a lender appraisal fee. These fees may vary between lenders and different mortgage transactions.
You should also look at the prepayment charge (ERC) associated with a mortgage transaction. You will almost certainly have to pay ERCs to leave a fixed rate mortgage before the end of the fixed term.
How much can you afford to borrow?
How much you can borrow for a mortgage depends a lot on your income. Typically, mortgage lenders lend you up to four times your annual salary. So if you earn Â£ 50,000 a year, you will be able to borrow Â£ 200,000 as a mortgage.
However, along with this, the lender will also perform an affordability assessment to look at any financial commitments you have such as child care, outstanding loans, credit cards, or debts.
Interest only or refund
With a traditional paying mortgage, your monthly payments include interest and some of the principal you owe. At the end of the mortgage term, you will have paid off your entire mortgage and own your property.
With an interest-only mortgage, you only pay the interest on your home loan. This means that your monthly payments will be lower. But at the end of the term, you will still owe the mortgage lender the amount of money you originally borrowed.
Tips for reducing your monthly mortgage payments
You can reduce your monthly mortgage payments by doing one or more of the following. Just keep in mind that the latter two don’t “save” you money, but build up your debt for the future.
- Pay a larger down payment when you buy a property or pay off a lump sum on your mortgage
- Find a mortgage with a lower interest rate
- Extend the term of your mortgage
- Pay your mortgage on interest only
What are the different types of mortgage?
The two main types of mortgages are fixed rate and variable rate. With a fixed rate mortgage, the interest rate, and therefore your monthly payments, are fixed for a fixed term. It is normally two, three or five years, but can be longer.
At the end of the fixed rate period, you will normally be transferred to your lender’s Standard Variable Rate (SVR).
With a variable rate mortgage, the interest rate can change. If that changes, your monthly payments will go up or down. There are different types of variable rate mortgages, including SVR mortgages, trackers, discount mortgages, and capped rate mortgages.
How do I apply for a mortgage?
How long does it take to be approved for a mortgage?
How long do mortgage offers last?