Tips for Using A Mortgage Repayment Calculator

Mortgage rates are historically low and many people are finding home ownership attractive when comparing repayments to rents. In the euphoria of finding affordable repayments, you may want to consider the following: Repayments may be low now but they could be much higher if interest rates rise in the future. It is important to think beyond the fixed-interest period of your mortgage. When this period expires, you do not want to be in a situation where you are forced to sell in a weak housing market. Many people found themselves in this exact situation in the United States after the bursting of the property market bubble. The results returned by mortgage calculators are only as accurate as the data entered. Results should only be considered as approximations. The mortgage calculator you use may or may not take into account such things as monthly fees. Also, during the life of the loan, there are often several irregular events and circumstances which may cause you to fall behind on your repayments or borrow more money. Things such as late payment penalties and lump sum repayments can compound and significantly affect the repayments over the term of the mortgage. Make sure you compare oranges with oranges. As discussed, fees can significantly eat into your repayments and it may take considerably longer to pay off your mortgage. Therefore, when comparing the mortgage repayments for more than one mortgage product, it is advisable to enter the "comparison rates" rather than the quoted variable rates. Comparison rates take fees into account. Finally, you may not be able to borrow as much as you think. The level of repayments that you consider to be affordable may be considered risky by your lender. Lenders have become stricter in their lending criteria as a result of the Global Financial Crisis. This may actually be a good thing though. Life is full of surprises, so make sure that you allow for the unexpected. The consequences of not being able to meet the repayments on your home could be catastrophic for you and your family. When it comes to borrowing, as the saying goes: "it's better to be safe than sorry".