Mortgage Calculator, what Is It and What Can it Calculate?

If you are currently shopping around for a mortgage, you've probably found out by now that they come in all shapes and sizes. Interest rates that can be variable or fixed, loan terms ranging from a few years to 30 years (even 40 years in some cases), options of repaying monthly or bi-weekly and more fees and clauses than you can poke a stick at. To make matters worse, just to calculate the amount you can borrow, your repayment amounts and the total cost of the loan, you need to plug all these numbers into some pretty ugly financial formulas.

A mortgage calculator is designed to do all the complex calculations for you. By entering your income and living expenses, you can calculate the repayment amount you can afford each month, and from this you can calculate the total mortgage loan amount you can afford.

A mortgage calculator is also great for comparing different loans with different fees and interest rates, as it lets you see the true cost of each loan. You enter in all the relevant information and it calculates expected repayment amounts, amortization schedules and the total cost to you.

For example, assume you are looking for a mortgage for 150,000 over 30 years. Bank A is offering you an interest rate or 6.9% with no upfront fees, and bank B is offering you and interest rate of 6.7% with 750 of establishment fees. Which is the cheaper option over the life of the mortgage?

Bank A (at 6.9%) will end up charging you 205,644 in interest payments over the 30 years, and bank B (at 6.7%) will charge you 198,451 in interest payments plus the 750 upfront fee (a total charge of 199,201). Despite bank A being over 6,400 more expensive than bank B (205,644 compared to 199,201), many people still go with bank A to avoid the upfront fees.

It's worth remembering that when dealing with mortgages, the smallest change in interest rates can make a big difference to the total amount you end up paying. A mortgage calculator can help you calculate the true cost of a mortgage before you sign up with a lender.

If you are currently looking for a mortgage, want to know how much you can borrow, and which mortgage is the best deal for you, a mortgage calculator can save you thousands by helping you chose the right mortgage.