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What is the BBC mortgage calculator?
The BBC mortgage calculator is an online tool embedded within the website for the British Broadcasting Company.
It is designed for potential borrowers to get an idea of what their monthly payments would be on their mortgage.
It allows you to work out your monthly payments on both an interest only basis, and a repayment basis.
The calculator requires you to put in the mortgage balance, the term, and the interest rate.
With this, you will be able to work out what your mortgage will cost you each month.
It also tells you what your mortgage payment would be if the loan was at a high interest rate, such as 12%.
Tools like this can be a useful way for borrowers to budget when they are looking at taking out a mortgage.
The BBC mortgage calculator was one of the first online, and still has a lot of people that use it.
Nowadays, there are many of these tools built into mortgage broker’s websites to help prospective borrowers.
Google even have their own mortgage payment calculator, which works in a similar way.
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How does a mortgage affordability calculator work?
A mortgage affordability calculator is a bit different. It is an individual calculator for calculating how much an applicant may be able to borrow.
Lenders all have their own one which works different ways.
When researching mortgage calculators, suggested ones include Halifax, Barclays, Nationwide and NatWest.
Lender’s mortgage calculators take into consideration full income and outgoings to calculate an applicants’ maximum loan.
They would be looking at the property price, suggested loan-to-value, income and breakdown of it (for example, basic income, allowances, bonuses, commission, etc) including benefit income if applicable.
It also takes into account your dependants, debt balances, monthly payments and whether these will be payable following completion.
As long as the information that goes into the calculator is inputted correctly and broken down in the right boxes, the amount that a lender can offer you at the end of the process is usually accurate.
Mortgages are subject to full underwriting though, so there are no guarantees. A mortgage affordability calculator should be used as a guide only.
Should I use a mortgage calculator?
If you were trying to work out what your mortgage payments are likely to be, a tool such as the BBC mortgage calculator is a useful resource.
This allows you to calculate what you were likely to be spending when you do your research.
This is of course based on knowing how much you were going to be borrowing, and what the interest rate will be.
If you were looking at using mortgage affordability calculators, although useful, it is still recommended that you consult an expert.
The reason is, lenders all have their own rules and criteria, so where some may be willing to offer you a mortgage, other lenders may not.
Mortgage brokers also know how to break down income correctly based on the lender’s own rules.
For instance, some lenders will take the latest years’ bonus, whereas some will take the lower of the last 2 years.
If the wrong figure is put in the lenders affordability calculator, this will likely affect the loan that is offered to you.
There are also many lenders to choose from, so brokers will use a mortgage sourcing software such as mortgage brain to find you the best deal.
Mortgage calculator interest only
In addition to mortgage repayment calculators, there are also interest-only payment calculators online.
If you are unable to access one, the calculation is a lot simpler to work out than a repayment calculator.
To do so, take the mortgage balance, multiply it by the interest rate and divide it by 12 (for the amount of months).
For instance, a mortgage of £100,000, and the interest rate is 4%, the monthly payment would be £333.33.
How many times my salary can I borrow for a mortgage?
A common question that borrowers ask is how many times their salary will they be offered for a mortgage.
The truth is that it varies, depending on the lender. How much salary that you get can also affect the calculation.
For a higher earner, at a loan to value less than 90%, there are lenders that can consider mortgages up to 5 x income.
Sometimes lenders can even go higher, for example, 5.5 x income.
Lenders change their affordability calculations regularly, so best to speak to an independent mortgage adviser that can often arrange a larger mortgage and calculate your maximum loan, based on your individual situation.
Do mortgage brokers rely on the BBC mortgage calculator as a tool?
Mortgage brokers are unlikely to use the BBC mortgage calculator as a tool.
The reason is, they have plenty of other resources for calculating monthly mortgage payments.
They do however use lender’s affordability calculators as part of their research when assessing what amount you can borrow.
Some brokers also use websites such as Mortgage Broker Tools, which allows them to do a calculation across the whole of the mortgage market, for an initial guide to which lenders may be able to offer you the amount that you need.
This is often followed by a calculation on the lender’s website themselves, to double-check the figure seems accurate.
Mortgage brokers are more likely to know how to break down your income, if it is more complex and coming from different sources.
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Conclusion
The BBC mortgage calculator can be a useful tool for working out how much your monthly payments will likely be, which helps you with your budgeting.
The tool is no longer unique, with many websites offering a similar calculator.
Affordability calculators work in a different way, and all individual to the lenders, with different algorithms built into them.
If you are looking at calculating how much you can borrow, it is recommended that you talk to a professional mortgage adviser.
This can avoid progressing with the wrong lender, where you may not meet their lending criteria.
If you would like I NEED ADVICE to match you with an independent, regulated mortgage broker that can calculate your affordability, telling you the monthly payments, please complete the contact form.
They are experienced, which can boost your chances of being approved.
