So, you’re thinking about getting onto the property ladder?
It’s a big step and very likely the most expensive purchase you will ever make. But don’t panic! Just make sure that you don’t bite off more (debt) than you can chew.
First step is to work out how much you can afford to borrow. It’s a great idea to make a budget planner to give you an accurate idea of exactly how much you are committed to spending each month on things like council tax, utilities and groceries. Once you’ve worked that out, check your recent pay slips to calculate exactly how much you are earning after tax. Now take away your expenses from your income and what’s left over is (very roughly) what you might be able to afford to spend on a mortgage.
With your rough monthly figure in mind, you can now go off and ‘shop’ for a mortgage. Each lender will have a website where you will find a basic online mortgage calculator. Here you can input a few figures (usually your income, your deposit and how much you want to spend per month) and, hey presto!, it will do a very basic calculation to give you figure of how much you can borrow. Woohoo! But can it really be that straight forward?
There are two important things you need to understand about mortgage calculators:
- This basic calculation is not enough. When it comes to submitting an actual application, the lender will need a lot more information in order to be able to decide whether or not to lend to you and how much to lend. So don’t take it as red that this will be an accurate figure.
- Each lender calculates the answer differently. Behind the scenes they will be considering a huge variety of factors such as your age, your type of employment, events going on in the world at the time etc etc. So just because one lender says that they will lend you x amount, doesn’t mean they all will.
So, if the online mortgage calculator is not accurate, how can you find out where you really stand?
Well you have two options. You can either start calling all the various lenders, do your research and fill in a lengthy form for each one to make a comparison OR you can find a reputable mortgage broker who already has access to a huge range of lenders and has all the inside knowledge on which ones are likely to lend in each situation and, essentially, let them do the hard work for you!
Top tip: If you’re looking for a broker, make sure you choose one that is ‘whole of market’ as they will have access to the most different options and they won’t have an affiliation to any particular lenders. Oh, and ask around. Find someone who has done a great job for someone you know or, failing that, who has excellent reviews. Call a few, see who you like the feel of, it’s essential that you trust your broker and feel safe in their expert hands.
I really hope that’s helped explain a bit about online mortgage calculators. For more info on this and all the other stages of getting a mortgage, check out our YouTube channel or have a listen to our podcast and feel free to give us a call if you’d like to chat through your situation.
Rave safe!
Graham 🤘
