Choosing the correct mortgage when buying a home can be a little confusing. There are many options available and ways to go about handling the mortgage too. Choosing the correct one to fit your needs may not be the easiest process. Yet you have tools like the mortgage calculator to make it a little easier.
Searching for Mortgages
Looking through all the available types of mortgages is one of the first steps, plus there is the option of considering mortgages that you may not have thought of. There is the mortgage to consider which is an interest only mortgage.
Your age also determines what type of mortgage product you will want to look for. For example an interest only lifetime mortgage is different from an interest only mortgage. You may be over 55 years of age, which offers you a lifetime mortgage product. You get to pay on this mortgage leaving the capital sum the same. You pay until death or move to long term care facility.
For a regular interest only loan you pay on interest for ten years. At the end of those ten years you must make a balloon payment. It requires you to have enough funds to pay off the mortgage in 10 years. This is why using a mortgage calculator is very helpful. You can ascertain what is most beneficial to you with regards to a range of mortgages.
Halifax Helping Tool
There are Halifax mortgage calculation programmes that can help you determine how much can be borrowed under an interest only loan. These are available by simply entering in that you want an interest only mortgage, then entering in how much you make per year, any additional income you have per year and how much other debt you owe.
The calculation will show how much can be borrowed based on those numbers. This will give you an idea of how much you can borrow and how much the monthly payment may be if you borrow the entire amount too.
Lifetime Mortgage Calculators
You should be aware that lifetime mortgages require a different calculation. While you can use the home value, income, debt, and any additional income made for the standard interest only mortgage in the Halifax calculator, you will need to find a lifetime equity release calculator if you are over 55.
For a lifetime mortgage you the main calculation is based on your age and home value. The calculator determines your possible life expectancy to determine what is most affordable in a lump sum payment of equity. The older you are the more you can release. Additionally, income is not an issue here. Most companies will check to see if you have income to make the payment with, but will not require a full time job’s worth of income.
The home value will need to be accurate in order to determine how much you actually have to release. It can be based on an appraisal recently completed. If you do not have one find recently sold homes in your area to compare your home to. Use that value as a guide.
Calculating Results is a Guide
Whether you are looking at interest only mortgages for retirement or as a standard interest only mortgage, it is important to remember the calculator is a guide. The values you obtain from any online calculator are an estimate of potential. You may find a different interest rate, a better appraisal amount, or something else changes from your calculation when an independent broker runs the numbers.
Speaking with Professionals
You certainly need to speak with a professional when it comes to any type of mortgage. When you choose that professional make certain they have proper qualifications and belong to regulatory authorities. You want a person you can trust and one that is regulated properly. It is also best to choose a person that understands the mortgage products you are looking for. Someone in a regular mortgage industry will only have cursory knowledge of equity release products for retirees. This can be extremely important when it comes to getting sound advice that you will place your home on the line for as the collateral to any loan.
Using a mortgage calculator is a great way to understand what your options are when it comes to purchasing a home and how much of a payment you will be making. It gives an overview of what you can expect and what your obligations will be. It is always meant to be used as a guide, never an absolute value.