For most people beginning the search for a new property the very first question is …. How much can I afford to pay ? That’s where a mortgage calculator comes in.
A Mortgage Calculator will be able to give you a high level indication of the maximum amount you can borrow based on your financials. It looks at your income, outgoings such as loans, expenses and childcare and also your gross and nett pay. From this, it will provide a maximum borrowing number. This will then be a starting point for home hunters to look on property portals or speak with their local Estate Agents to see what’s available in their desired locations.
There are literally hundreds of different mortgage calculators out there – from the very simple to the overly complicated. You will find most mortgage providers will have their own unique one on their websites – see AIBs
This is an example of an overly complicated mortgage calculator – it requests a huge amount of information and will still give you roughly the same answer as a short one such as Pangea Mortgages. Some mortgage calculators will look for your current mortgage repayments (if you have an existing mortgage) and show you how much you could say over the lifetime of the mortgage and each month.
You can also compare what the costs would be if you were to extend or reduce the length of your current mortgage.
The best place for this is bonkers.ie
So how exactly do they work ? In reality they are just a large excel. They will take your gross income and multiply it by 3.5 times and that gives the max borrowing amount. Some calculators will take some deductions from this for outgoings such as loans or childcare. The Banks will all have their own criteria for what would be deducted for each child say – but you won’t see this in the calculator all you get is an output number.
In order to use the calculator as accurately as possible you need to provide the correct information. Giving your exact income and savings available will then get you a true picture of what’s possible. Too many people round up – or provide next year’s post promotion pay. This will only leave you disappointed as Banks only take actual numbers into account once you make a formal application. There are also more and more “Green” offers available form lenders so speak to you mortgage advisor in Pangea to find out more.
A Green rate is for properties with a BER of B3 or better.
At Pangea Mortgages we believe the main number you should be concerned about is your monthly mortgage repayment. This is key to affordability and will have the greatest impact on your day to day life. Too many people get caught up with the total mortgage cost or house purchase price number €400,000 or €500,000 but you don’t actually pay that amount !!! What you pay will be €1,650 or €1,750 per month. This is the key number to focus on. The mortgage calculator will always provide this.
A mortgage calculator is always only a high level estimate of what you can borrow, in order to get a full picture of what’s possible we recommend booking a free mortgage consultation with us. We can give you an exact amount that you can borrow, monthly repayments and tips to help get approved for the maximum loan amount.
At present with mortgage rates globally rising and market expectations in Europe for rates to begin rising soon it is more important than ever that you get exact information from a broker. A Mortgage Calculator is a good tool for a starting point, but this is not an offer from the Bank – they are not obliged to lend you this amount. By speaking with a Pangea Mortgage broker, we will go through in detail your financials and show you exactly how much you can borrow , breaking out your repayment and interest costs.
Remember – with AIB or Bank or Ireland they will only ever show you their rates. They won’t advise what the best market rate for you is. A detailed plan with a broker gives you the best possibility of a successful mortgage application