28 Feb 2015:
When you’re thinking of buying a home, you will need to consider all your financial options. The process of purchasing a new home is never that easy, and you will find there is an awful lot to think about, but please don’t let it put you off.
Buying a new home is a great experience and there’s nothing quite like getting those keys in your hand for the very first time. Even though you may have only considered buying a property, now is the time to think about your finances and how much you can realistically afford to pay off each month.
This is where a Home Loan Calculator can come in and help you, as it is able to work out how much money you have, and how much you can afford to pay each month. This could be a bit of a lifesaver, as some people have bought homes only to find out they cannot realistically afford to keep up the payments every month.
Have a sit down and think about:
- How much money you earn
- How much money you have saved
- How much you receive in benefits each month
- Your current monthly outgoings
- Any future changes in income and outgoings
You will also need to consider the income and outgoings of anyone whose name will appear on the home loan with you, as this will affect the size of your mortgage.
Remember that it’s vital to get the information right as you could lose your home if you’re not able to pay your home loan every month. Please be aware that you will not lose your home right away as home loan companies can give you a bit of leniency from time to time, especially if you’ve not had any difficulties in the past.
Paying Off Your Mortgage
You will also need to think about how long you would like to take to pay your mortgage off as this will affect the final sum. If you choose to buy your home over a period of 10 years, you will pay a lot less interest than you would if you chose to pay it off over 15-20 years.
While many people wish to pay their home loans off as quickly as possible, leaving yourself with very little cash each month is not a good situation to be in. If you would like to pay your mortgage off over 10 years, but you risk having little money left after you have made your payment, you might want to think about extending the term to 15 or even 20 years.
This is where a home loan calculator will help you out, as it will give you a rough idea of what you need to be looking at. You should be aware that until you agree to take out a mortgage, you will not get the exact facts and figures you need from a home loan calculator. You should also be aware that mortgages can change due to interest rates and inflation, so you should be aware of this too. If you have any queries, contact a financial advisor and they will be able to help you.