personal finance

Mortgage calculator: What are they and how do they work?

Homes can be repossessed if repayments on mortgages fall behind so it is crucial to ensure affordability. Repossession is still a problem across the UK, with the latest data from HM Land Registry confirming that over 500 repossession sales occurred in England and Wales in September 2019 alone. Fortunately, mortgage calculators are now readily and freely available online to assist people with their mortgage affordability planning.

The Money Advice Service offers a mortgage affordability calculator with a few more options.

Once income is worked out, they require information on monthly costs including credit card and loan payments, child and spousal maintenance, childcare fees, travel costs, bills and current rent payments.

Lifestyle and leisure costs will also need to be included and these will cover holidays and entertainment.

Once these details are entered, the tool will reveal the total amount you may be offered, how far your income will stretch after mortgage payments and other details.

They all provide the same usage as the government versions as well as additional options. Examples can include comparison services for mortgage rates, popular location finders and calculators for interest rates and buy to let deals.

New mortgage applicants and borrowers will likely want to take advantage of these tools in the light of the Bank of England’s decision to keep the bank rate at 0.75 percent. With the continued low-interest rate environment, borrowers will find that they hold strength when applying. Lenders may consider cuts to their offers to try and gain an edge on their competitors.

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However, caution should never be completely thrown to the wind. The economic strength of the UK could be affected by the coming agreements made with Europe and the Bank of England details that growth is expected to be only around 0.2 percent for the first quarter of 2020.

Affordability and budgeting should always be at the forefront regardless of how well things are going. Despite this, recent analysis by UK Finance, a banking body which represents over 250 companies across the finance industry, detailed that new mortgage approvals by British high street banks those to their highest level since 2015 in December.


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