Mortgage calculators are a great way to take into account your borrowing capacity in a couple of simple clicks. Add the amount you want to borrow into the calculator, followed by the length of the mortgage term, plus the interest rate incurred gives you a ball park figure of how much you will have to repay to the lender each month.
But can you rely fully on the mortgage calculator for accurate results? It’s a difficult question, because even though you have chosen your dream property and now you know how much you can afford for your mortgage each month – it should be a walk in the park, yes?
Unfortunately, relying on a mortgage calculator alone isn’t a great idea, the fields are limited plus your lender takes other factors into account. For example, it is unlikely any lender will offer you a mortgage if your credit history is less than perfect. If you have defaulted on payments in the past but managed to pay the debts off and haven’t had any problems since, you may scrape through. You have to be able to prove you are a reliable and trustworthy candidate for them to even consider lending you the funds. The use of a mortgage calculator however accurate, and credit worthy you are today, will not automatically guarantee your loan approval.
Another downside of relying on the mortgage calculator alone is its inability to take into account varying rates over the loan term. For example, you may be offered a 3 year fixed APR at 3.8% but after that it reverts to a variable rate. If at the end of your fixed term, the variable rate is sitting at around 4.5% it can hike a large increase onto your monthly repayments.
This should always be considered. Using a qualified mortgage broker will help you determine what you can afford and also calculate with you how the amounts will alter over time, taking into account your circumstances and loan offer. They will also assist you in completing the paperwork, one small slip in annual earnings, omitting a zero in error will have your entire dreams crashing down around you. Double check all of your paperwork prior to submission and ensure the information you are giving to the lender is 100% accurate.
Mortgage brokers are also beneficial for other reasons, if they have been working in the industry for a while you will find they have good relationships with specific banks and lenders. If this is the case they will perhaps have a loan agreement for a limited period which is unique to them, meaning you won’t achieve the same terms elsewhere. They also become aware of how the lenders credit score your application. Each lender has a specific algorithm which profiles their ideal customer, some are more lenient than others and will offer a mortgage to you if you have a less than perfect credit history. Your mortgage broker will know this and can assist you, taking away any stress of searching for weeks just to be turned down after going through the entire paperwork process.
So, yes, using a mortgage calculator is fine, if used to give you an indication of what you could possibly borrow and the repayments, but remember there are many more factors to consider before you sign on the dotted line. Mortgage brokers Melbourne have been assisting with the customer lending process for years, contact them via www.mortgagebroker247.com.au and they will be able to talk you through everything you need to know.