Mortgage tools may include mortgage calculators on a Lender or Adviser’s website. They may be a useful indicator to help a borrower or prospective borrower to find out how much he or she can borrow.

Mortgage tools sound technical but they are a little bit like online forms, where lenders may ask you to answer questions and give them the following pieces of information:

  • how much you earn;
  • how much your partner earns;
  • how much you expect to receive in bonuses this year; and
  • how much you pay out in loan repayments.

On the basis of this information, a mortgage calculator facility may typically be able to tell you how much Lenders on the open market may be prepared to lend you (although this does not necessarily mean that you will get accepted for a mortgage loan or that this is the amount you will definitely pay or be able to borrow – it should be used purely for indicative purposes only).

Working out repayments
Repayment mortgage tools may be able to tell you how much the monthly repayments may be for the amount you are considering borrowing. A repayment calculator may ask for:

  • the amount you want to borrow;
  • the length of time the loan will be outstanding; and
  • the interest rate you expect to pay.

Limitations of mortgage tools
Having an idea about how much you may expect to borrow, and what the monthly repayments might be, may help give you a realistic idea about the houses you are able to look at.

However, mortgage calculators may have their limitations. For example, they are based on a snapshot of your financial situation and don’t take into account your credit record or your other circumstances.

So a calculator may say that you can borrow a certain amount, but when you come to have your credit history and day to day expenses fully examined by the Lender, that amount may not be available.

Another limitation of online calculators is that mortgage tools do not give mortgage advice. To be certain that a mortgage is right for your individual needs, a Mortgage Adviser may need to assess your current finances and your aspirations for the future in order to select an appropriate product on your behalf. This is where Shire Financial Management comes in. Our Advisers may be able to give you a more realistic borrowing figure, and point you in the direction of a Lender who will be willing to lend it to you.