Are Mortgage Calculators Only Offering Bad News?
Friday December 5, 2008
Sometimes mortgage calculators will tell you that you can borrow far less from a mortgage company than you originally thought you could. If you just don't earn enough and the interest rates aren't low enough, you may find that you are unable to purchase a home in the price range that you feel you need to. If you have come across this in doing your calculations, then there are a few things you should look into.
First of all, have you tried using many different mortgage calculators? Not all mortgage calculators will operate on the same assumptions, especially those designed to calculate the amount that you can afford to borrow. Just as different sources can offer seemingly contradictory mortgage tips based on different backgrounds, mortgage calculators will be based off of the ideas of their creators.
Secondly, your own assumptions can have an effect on what calculations are made. If you tend to think negatively, you may have chosen variables that are the worst case scenario. For instance, you may have made calculations on the assumption of the worst possible interest rates over the longest period of time. It is important not to confuse the worst case scenario with a realistic scenario, though. While you will certainly have rough patches in repaying the mortgage company, you are probably unlikely to have a 20 year rough patch unless you take out a ridiculously higher amount than you can afford to borrow.
Thirdly, remember that you may be eligible for certain grants. Mortgage calculators may not take that into account. If you are just a few thousand or tens of thousands of dollars short, there may be a grant that you are eligible for that could make up the difference. Grants can be especially helpful in offsetting the associated costs of buying a home, such as stamp duty and other taxation.
Please visit our comparison page if you would like to compare home loans and mortgages or to find out more about a specific mortgage company.
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