What is a Mortgage Calculator?
A mortgage calculator is a tool designed to help clients know how much loan they are entitled to, the repayment amount and period and the interest due.
Mortgage Calculation and Comparison
Most borrowers find themselves stranded on the most preferable loan product to settle on when sourcing for a home loan.
To fulfill this need, a mortgage calculator comparison website would come in handy to help borrowers have a one-stop shop for their mortgage calculation and comparison needs.
Key Terms and Variables in a Mortgage Calculator:
- Interest Rate; This is the rate at which the loan is charged. It varies from one mortgage provider to the next. This is determined by the amount requested by the borrower and also the repayment period.
- Principal Loan Amount; This is the original amount borrowed and is usually provided by the borrower. It usually is the total value of the home to be purchased or a percentage of the same.
- Repayment Period; This is the period in which the borrower intends to repay the loan given, inclusive of all interest and taxes. It is either in years or in months. It is determined by the borrower with regard to his cash inflow or income sources, financial commitments and the maximum repayment period provided by the lender.
- Repayment Amount; This is a derivative of the loan principal, the interest rates and the repayment period. It is the amount that the borrower is expected to give every month towards offsetting his loan.
- Percentage Home Loan Financing Some mortgage loan providers only cover a certain percentage of the total cost of the home. This means that the borrower is expected to cover a small part of the home cost and the rest is covered by the loan provider.Some loan providers also choose to cover the cost inclusive of the processing cost and thus you will find that if the processing cost of the loan is 10% of the loan, the lender will be giving you a 110% financing for your loan.
- Transaction/Processing Fees; These are any additional costs for loans and are usually a small percentage of the total loan. These are usually deducted from the loan amount that is dispensed to the borrower.
- Insurance; Due to high defaulter rates among borrowers, some lenders introduced an insurance cost for their loans. This is usually beefed up to the cost of the loan and can be at times classified with the transaction costs of the loan. This is usually to cover the lender in case of default by the borrower.
- Taxes; These could be government related like excise and stamp duty or industry specific. They make up part of the loan and borrowers are encouraged to be very keen on all such charges.
- Security; The security for mortgage financing is usually the sale agreement for the property purchased, which is held in custody by the lender until the loan is fully repaid. Should the borrower default on repayment, the lender can institute legal proceedings to acquire custody or even resell the property to recover the unpaid amounts.
While putting into consideration the above-mentioned parameters, a mortgage calculator comparison website would provide a solution for different users for their loans to give the most friendly mortgage product for you.