Many people want to know what kind of home loan they can get for a certain figure per month. This figure is typically the maximum they can pay for a loan to help them buy a property.
For example, someone may have worked out they can pay up to £1,000 per month as a repayment figure. The best way to calculate the potential loan they could get is by using an online calculator to crunch some numbers. You are usually required to enter the amount of the loan you wish to have. You would then see a table giving you the likely figures for that amount.
The best tables and calculators provide more information than you might think. For example, some will reveal what the monthly repayments would be if you were to take out your loan over five, 10, 15, 20, or 25 years. Some even provide 30-year terms to consider. The longer your term lasts, the cheaper the monthly payment would be. However, the amount of interest you would pay would be higher.
By inputting different figures, you can get an idea of the best term to go for, not to mention adjusting the interest rate to see what effect that might have.
Why would mortgage payments go up?This is most likely to occur if you are on a variable rate deal and the interest rate goes up. If you are on such a deal, it may be prudent to consider switching to a fixed rate plan instead. The basic interest rate applicable is likely to be higher, but you get the guarantee that the rate will remain the same for the duration of the loan.
Why would mortgage payments decrease?This works in reverse to the point mentioned above. Customers on a variable interest rate will likely see a reduction in their mortgage payments if interest rates were to fall. However, this would only occur if the lender decides to pass the drop in the base rate on to the customer.
How to find out when mortgage payments are dueThis will be arranged with your lender. They will notify you of the date of your first payment. The monthly payments will then be taken on the same date for each subsequent month.
It is worth remembering that the initial payment is often higher than the regular payment you will make each month. This takes into account the time taken between buying your home and making your first payment. For example, you might make your first payment in August, even though you moved in towards the end of July. That first payment would therefore need to cover the days in July as well.
What happens when mortgage payment is considered late?If you miss a mortgage payment, you will be notified of this by your lender. Sometimes, a payment may be missed because funds don’t reach your account in time for the payment to go through. If this is the case, you should rectify the issue as quickly as possible. If you do this, there should be no issue. Your lender is required to give you a grace period to rectify the matter, so if you stay within this you shouldn’t experience any problems.
However, if you fall into arrears with your mortgage and you are struggling to make payments on it, speak to your lender as soon as you can. Many people do not want to do this, but it is by far the best way to protect your home. Your lender would much rather you continue to make payments on it, even if that means coming to a new agreement to pay less for a while or to extend the term.
What mortgage can I get on 32k?Again, an affordability calculator is the best way to answer this question. You will be asked to type in your annual income before deductions, and the amount of money you take home with you each month.
Before you get a loan amount, you will also need to enter your current outgoings, i.e. bills, household costs, and so on. There is no clear answer to how much you might get if you earn £32,000 or indeed any other amount. The trick is to work out your outgoings, so you can see how much cash you have left each month to pay a home loan.
What mortgage term can I get?The traditional term is for 25 years, although more lenders are starting to offer longer terms of 30 years or more. The rule of thumb is to go for as short a term as you can reasonably afford. The difference of even a year or two is quite marked when you look at how much interest you will end up paying over that time. The faster you can pay back every penny you owe, the cheaper the overall deal will be.
In 2017, the Bank of England revealed that one in six applicants were applying for mortgages spread over 35 years – and sometimes longer. While this might make sense for people in their twenties, the older you are the more likely it is you will be faced with making repayments after you have retired. Finding the money to meet these payments can be challenging at best. Always consider your future when assessing which deal makes the most sense for you.
What mortgage deposit do I need?You will generally require a minimum of 5% of the total purchase price as a deposit. However, if you can provide a greater chunk of the purchase price for your property upfront, you should get access to better deals for the home loan to cover the rest.
Look for LTV deals – that is, loan-to-value deals for less than 95% of the sales price. If you can offer, for example, 40% of the asking price, you should look for 60% LTV deals. These will usually provide you with a cheaper interest rate, although deals will likely vary between different lenders.