Mar 22

Benefits of using a Mortgage Calculator

A Mortgage calculator can be crucial for people who are looking into buying a home. While it is nice to think that people can buy a house without having to deal with a mortgage, most people who buy a home require a loan. The numbers and equations in obtaining a mortgage are enough to confuse anyone. Many people simply talk to their mortgage broker or the lender to try to figure out exactly how much a mortgage will cost them. There is a way to be informed on the mortgage as a first step to making any decisions. By using a mortgage calculator, you can figure your payments and basic costs. There are various calculators which can help you in any number of calculations.

What Calculators are available?

There are calculators available for almost any purpose you can imagine, below is a basic list available for mortgage purposes.

  • Debt Consolidation Calculator – Work out the benefits of consolidating your debts.
  • Cost Calculator – Work out how much it’s going to cost you to buy your house.
  • Repayment Calculator – What are your repayments going to be?
  • Borrowing Calculator – How much will a lender offer you? This is usually a very general calculator. The only definitive way to assess this is the speak to your lender or mortgage broker.
  • There are also calculators for car loans, calculating balloon payments, the effect of extra repayment, lump sum repayments and many other purposes.

Know What You Can Afford

The first major benefit of a mortgage calculator is the ability to figure out exactly what you can afford. While many people can understand what they can afford as far as monthly payments are concerned, they are unsure how interest and everything plays into the numbers. The mortgage calculator gives you the luxury of playing with the interest rate, amount of deposit, and loan term to figure out what you can afford, and how to arrive at the loan amount that you can afford.

Know What Small Changes Do to your Payment

The next benefit is the simple idea that the mortgage calculator allows you to play with the numbers at will to understand exactly how changes affect your monthly payment. By playing with the different numbers you can figure out the best way to get what you want in a realistic way.

Know your Price Range

When buying a house people often find they are unsure of how much they can afford. How does Interest rate or deposit impact the price they can afford to pay for a house? What is the maximum purchase price? Some people believe they can pay a certain amount, but can actually pay more. Being informed will allow you to buy better and give you an advantage when negotiating with the vendor.

Do Mortgage Calculators have limitations?

Mortgage calculators are a fantastic resource as a first step to securing a mortgage or buying a house. The simple nature of a calculator is also its greatest limitation; there are many factors to consider in obtaining a mortgage that a calculator does not cover. For example, a calculator does not look into your credit worthiness or the impact a credit default has on the interest rate, or the amount you can afford. It also does not consider or have the ability to work out exact loan costs for your particular situation. A Mortgage Calculator should be viewed as a first step asset to obtaining a mortgage, but know they have their limitations.

Summary

When using a mortgage calculator, you can begin to educate yourself on what you can afford the basic costs and the benefits of various loan situations. You can have ready access to online calculators or even computer based calculators without dealing with a lenders sales pitch. Calculators are great as a first step to obtaining a loan or a mortgage, but know the limitations. Where possible make a call to a mortgage broker or a lender as the next informed step to obtaining a mortgage. When trying to restructure a mortgage, or to entering into a new one, the mortgage calculator can help you understand what you can do, and what you cannot afford.

Mar 18

Benefits of Consolidating Unsecured Debt to your Mortgage

Trying to have a hold on all of your debt can be difficult at the best of times. You may have multiple loans and debts for multiple reasons; debt consolidation can help reduce your overall repayment and manage your debt more effectively. Debt consolidation is simple; it brings all of the debt together under one single loan. Many people consolidate their loan into their mortgage, making it easier to bring it all together. There are multiple benefits to bringing all debt into one, but there are four major benefits of consolidating unsecured debt to your mortgage.

Does the Interest Rate make a difference?

By using Debt Consolidation, you can actually lower your overall interest rate that you are paying. The idea is that you are moving all of your debt to one location; this often requires the need to re-configure and restructure an existing loan. If you consolidate your loans, certain debts may be a lower interest rate because the new interest rate is better than the old one. While this may not happen with all debts, just because the new loan is being stretched over a longer period may reduce the repayment and hence make the loan more manageable. For example:

  • The repayment on a $20,000 loan at 11% over 3 years is $652 per month. If this loan was consolidated into a 30 year mortgage with the same interest rate the repayment would be $190 each month. Effectively releasing cash flow of $462 each month.

The above example shows how people can get a handle on their finances. It could help you afford your monthly payments, where you may not have been able to as separate debts.

Why use a Mortgage to secure the debt?

The loan options available to consolidate your debt are using a Secured Consolidation Loan or an Unsecured Consolidation Loan. When a lender has security against a loan product they will offer you a higher loan amount and a better interest rate. Both these features allow a better result when consolidating your debts. A low loan amount may prevent you from consolidating all of your debts. At times this may prevent you from obtaining a Debt Consolidation Loan all together.

Convenience and Simplicity

The most exciting benefit of debt consolidation, however, is the simple convenience factor. By consolidating your debts, you are bringing all of your debt into one place. Many people often have 3, 4, or 5 loans and sometimes up to 10 loans; this can be very difficult to manage and keep all of your loan agreements. Paying one lender, with one interest rate, and one monthly payment can make your finances significantly simpler to manage.

Conclusion

Many people bring their loans together through debt consolidation as a way to make their lives easier and simpler; debt is never fun for anyone, but debt consolidation allows you to manage your debt more effectively and take control. Consolidation can allow for lower monthly payments, and the convenience of having it all in one place. Consolidating your debt into a mortgage is an even better way to bring everything together under one roof; and make your debt work for you a little more.