Mortgage Calculator in the UK

9 November 2023

Owning your own property is the dream of many people. However, buying a house or flat involves a significant expense, often a challenging issue, especially for young individuals. An often-chosen way to quickly acquire a property can be through a mortgage. To calculate the potential loan amount for the purchase of a house or flat, and to understand your options and the amount of the mortgage payment, it might be worth using a basic mortgage calculator. What does obtaining a mortgage in the UK involve, how does the mortgage calculator work, what are the benefits of the tool, and how to use it correctly? Read on and discover the answers to these and other questions!

Mortgage Calculator in the UK

Many people living in the UK are choosing to give up renting properties in favour of buying their own homes. Although the formalities associated with a mortgage may seem complicated, acquiring a property in the UK using a mortgage is one of the usually chosen ways to quickly establish a home of your own.

The foundation of a safe purchase of a house or flat is having a stable job and the support of a credit advisor who will verify your income and credit history. It’s also a good idea to use a mortgage affordability calculator, which makes it easier to find the answer to the question of what type of property you can afford. Before applying for a mortgage, it’s essential to understand the rules of this type of loan to avoid any potential surprises.

Understanding the Mortgage

A mortgage in the UK involves obtaining a long-term secured loan for the purchase of a property. When formalising the loan, a formal mortgage deed is required on the purchased property between the lender and the borrower. The loan is secured by the purchased property, meaning that if the borrower loses the ability to repay the monthly payment, the lender can take over the house or flat.

To be eligible for a mortgage, the borrower should have a stable and legal source of income (employment contract or self-employment are the most common types of employments) and should also have saved funds for a down payment, usually at least 5% of the purchase price. Additionally, the approval of the mortgage depends on the borrower’s credit history; most lenders will expect it to be assessed as average or high. Therefore, the financial situation of the person applying for a mortgage plays a crucial role for the lending company. There are also lenders which might consider people with not the best credit history (e.g. previous bankruptcies, CCJs or missed/late payments).

The Role of the Mortgage Calculator in the Property Purchase Process

The mortgage calculator is a modern tool available at most lenders, and its features greatly simplify the initial assessment of your position and options in the process of buying your own home or flat in the UK.

Mortgage Calculator – How Does It Work?

It’s important to emphasise that using the mortgage calculator is incredibly easy, and the tool itself is intuitive. By providing the necessary input data, such as the loan amount, deposit amount, and repayment period, the calculator quickly calculates the monthly mortgage payments and its total cost. So, how does the tool work, and what data should be provided for the calculations?

Basic Input Data

To enable the mortgage calculator to perform calculations, you need to provide information such as:

  • Property Value – The property valuation affects the loan approval, so the lender will most likely inspect the property and commission its valuation. Therefore, it’s good to know this amount in advance, so you can get more precise calculations.
  • Deposit Payment – When it comes to a mortgage, the amount of the prepared deposit is crucial for the lender. As mentioned earlier, the down payment should typically be at least 5% of the property’s value, but the higher the deposit, the more favourable offers you might obtain.
  • Loan Term – To use the calculator, you should also assess the repayment period of the loan. The loan’s duration affects its total cost.
  • Mortgage Interest Rate – The loan’s interest rate depends on various factors, such as credit history, the type of bank or building society, the period for which the interest rate is fixed, the loan’s repayment period, the ratio of property value to the loan amount, or the purpose of the mortgage. To determine the most suitable deal, it’s advisable to consult with a financial advisor.

Calculations and Results

After entering the required data, the tool provides the following results:

  • Monthly Mortgage Payment – It is calculated based on the loan amount, the loan term, the deposit amount, and the expected interest rate.
  • Total Loan Cost – The tool provides the total loan amount, considering all the provided information.
  • Loan to value – Based on the property value and the deposit amount, the calculator determines the percentage of mortgage debt to the property value.

At the same time, it should be emphasised that the mortgage calculator provides only a preliminary simulation based on the provided values, and the calculations from this tool are not binding for any lender. However, it is worth conducting this initial calculation to understand the potential mortgage costs and the amount of the monthly payment

Mortgage Payment Calculator






Monthly Payment: £

Estimated Total Loan Cost: £

LTV (Loan to Value): %

Disclaimer: This tool is for illustrative purposes only and should not be considered as formal financial advice or an offer.

mortgage, calculator

Mortgage Calculator – Why Is It a Valuable Tool?

Utilising constantly evolving technology to create tools like the mortgage calculator is a prudent solution, making it easier for both borrowers and those involved in credit analysis. The major advantages of the calculator include fast calculations, enabling simulations of various loan scenarios.

Calculations

Avoiding Financial Surprises – Calculating a mortgage for a house or flat allows you to estimate the approximate mortgage payment, making it much easier to plan future monthly expenses after obtaining the mortgage. Furthermore, using the tool can help determine the approximate total amount of the loan, thus avoiding surprises such as insufficient deposit payment or a lack of funds to repay the mortgage.

Matching the Loan to Your Budget – The mortgage calculator makes it easier to adjust the loan amount to your current financial situation, allowing you to find out the potential maximum value of the desired property.

Quick Comparisons

Various Scenarios – Using the mortgage calculator makes it easier to analyse estimated monthly payments, which can be useful in planning your future budget.

Choosing the Right Option – The tool can help you find the right solution tailored to your financial situation.

Using the Mortgage Calculator – Steps to Follow

As mentioned earlier, using the mortgage calculator is relatively simple and intuitive. You just need to prepare the required data, enter it into the system, and analyse the results.

Gathering Necessary Information

Property Value – Before using the tool, you should know the potential purchase price of the property you’re interested in, as this value affects the calculations performed by the calculator. Additionally, you should prepare data such as the deposit amount and the monthly financial commitments.

Updated Interest Rate – To perform the calculations, it’s also advisable to have information about the mortgage interest rate and check whether the rates have changed.

Entering Data and Analysing Results

Step-By-Step Guide on How to Fill Out the Calculator – Filling out the necessary data and reviewing the results only takes a few moments. In the first step, you should provide information about the expected deposit payment and the value of the selected house or flat.

Interpreting the Results – After correctly filling out the calculator, you can expect results provided by the system. Then, the interested party receives information about offers from banks in the UK, their creditworthiness, and the total loan amount, taking into account all the provided values.

Summary – Mortgage in the UK

The mortgage calculator is an incredibly simple and useful tool that can be quite helpful during the process of preparing to buy a property and considering obtaining a mortgage in the UK. Before using the calculator, it’s a good idea to prepare information such as the deposit amount and the value of the selected property (if it has already been chosen). It’s advisable to consult the calculated result with a qualified mortgage advisor who will verify and assess the accuracy of the calculations.

Information current as of the publication date – 09/11/2023

The above material is for informational purposes and does not constitute an offer or financial advice. Before entering into any credit agreement or other financial product, it is necessary to obtain individual advice regarding your requirements and the general terms of the contract.
Your home may be repossessed if you do not keep up repayments on your mortgage.

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