A well-defined understanding of your mortgage and how much it will cost you is very important. A mortgage calculator helps you gain an understanding of the expenses and determine what rates will be the most beneficial for you in a simple and easy to understand method.
Essentially, a mortgage calculator will help you understand how much you are liable to pay on a monthly basis towards your mortgage depending on the interest rate, amortization period and down payment selected. It also allows you to experiment with different scenarios and help you estimate your payments. It can prove very helpful in the beginning stages.
What should you know about mortgage payments?
The first aspect we need to understand is the breakdown of the amount we use to purchase a home. The price of the home is the total amount of money you will be spending to buy it. This amount is almost equal to the amount you borrow. However, a small section of this will be covered under the term down payment.
A down payment is considered as an initial amount, which is usually 20% of the total value. This amount is not considered when looking at your total mortgage value. The mortgage value is only equal to the amount you invest in your house apart from the down payment.
In the mortgage amount, there are three divisions:
The principal amount is the actual amount you have borrowed under your mortgage contract. The interest is the percentage of money you will need to pay on top of your principal. The rates for interest vary continuously according to market trends. The pre-payment fees on the other hand is an amount you will have to pay only if your lender has mentioned it in the terms of your contract. This aspect does not come into play unless you break your mortgage contract earlier than what you had signed for.
How does a mortgage calculator work?
A mortgage calculator would provide fields for you to fill. Once you have filled in the information it will show you an estimated amount for the monthly payment. The calculator will require your mortgage amount or principal amount, the kind of mortgage, whether fixed rate or variable, and the interest percentage you are comfortable with and the amortization period.
Once the fields are entered, you can estimate your monthly payments towards the mortgage. The fields can be adjusted even after the results are displayed to find the values for different amortization periods and mortgage types.
How can a mortgage calculator help you?
Purchasing a home is one of the biggest financial decisions most Canadians make. This requires thought and understanding, and most importantly an in-depth knowledge of your finances.
A mortgage calculator combines the most important aspects of a mortgage payment to give you approximate results. These results are usually very close to the actual number and can help you understand where and how your money will be split.
This kind of forecasting can help you plan your finances well in advance and help you avoid any hassles in that area very easily. Most mortgage brokers in Canada suggest using a mortgage calculator to determine your mortgage payments. These payments can be calculated even on a bi-weekly basis.
Deciding your finances? Here’s the best way to go about it!
The primary objective of using a mortgage calculator is to determine under which scenario you will have to spend the least amount of money in both monthly payments and interests. Once you have toggled around with the available settings, you may arrive at different scenarios, a few of which may actually be feasible for you. But there are a few tips and tricks that can help you reduce your burden easily.
The first way to achieve better results is to reduce the purchase price you have decided on. This will really affect the end amount and can prove to be quite beneficial.Another step that can be taken is to reduce the mortgage rate you are looking at. This may mean having to adjust the amortization period. Choosing a longer amortization period can also help you reduce the immediate burden of payments that can arise.
One area where you can make a real difference to your mortgage payments is the down payment. If you can source enough money to cover more than 20% of your house’s purchase price, it could help you get better rates very easily.
What should be my next step?
Once you’ve got a clear idea of how much you can afford and how you will be splitting your finances in between the down payment and the borrowed amount, it’s time to start house hunting! With a pre-determined budget, it becomes that much quicker to narrow down a house which suits your needs and doesn’t leave you in deep financial trouble.
What should you know before you decide on a house?
The first and foremost thing to do when you are about to buy a home is to check your finances and your credit score. A lender will usually check for these aspects first to be able to determine whether you can actually pay back what you borrow. Since we have already determined the budget we are working with, a mortgage broker can help you get a pre-approval letter for your loan if needed. A pre-approval letter is essentially a confirmation from a lender stating that there are high chances of you being approved for a loan for a fixed amount. A pre-approval letter works well with sellers and can even help you stand-out amongst competitors.
While you look for your dream house, your mortgage broker will be searching for the right lender. A mortgage is something that you have to stick with for a really long time, might as well get the best rate available, and that is what a mortgage broker can help you with. With their expertise and market knowledge, mortgage brokers can help you understand the process and find the best rates for you with their many lenders. The lender may also be able to give you a decent interest rate if you go through a well-reputed mortgage broker.
Once you’ve decided on your house, do ensure you are getting all the checks done appropriately. Working with a well-established and knowledgeable realtor can help you avoid any hiccups in the process. They will perform a thorough inspection of the house, assess its value and let you know if the amount you are investing into the property will actually translate into results. This can help you when you are planning to re-sell the house later on down the road.
You’ve got your heart set on a house! How to get a mortgage now?
A mortgage calculator is essentially just a step in getting your mortgage. It helps you determine and your budget and plan your finances. But the process moves further only when you start actively looking for a mortgage. As mentioned previously, most mortgage brokers in Brampton have a wide range of connections with lenders and can provide excellent rates. Once you’ve decided your financial bandwidth with the help of the mortgage calculator results you can ask your mortgage broker to help you find the right plan. They will work with you to complete the process.
Other uses of a mortgage calculator:
A mortgage calculator can be used in other ways as well. Here are a few:
Many Canadians are not able to fulfil the quota of 20% down payment. Such borrowers may need to add an extra layer of protection on their mortgage plan. This protection is referred to as mortgage insurance.
Most private lenders recommend adding a private mortgage insurance plan to your mortgage terms to ensure their money is safe. It can even be beneficial for the borrower. In case the borrower passes away, the amount remaining will be paid by the insurance company and the family will not be under any harm. The payments for your insurance plan are added to your mortgage payments.
Using the calculator, you can toggle with the purchase price and mortgage interest rate to determine whether you will be needing any further assistance with your mortgage. Once we combine the results from this experiment with your financial performance, we can arrive at the need for a private mortgage insurance. Another helpful feature of the mortgage calculator is that it allows you to toggle between the different rates available for both fixed and variable mortgages. Variable mortgages tend to show more benefits usually. But the final result may vary drastically for each case.
Choosing a variable mortgage with a term period of 25 years and then choosing a fixed mortgage with the same interest rate and same term period will help you see if you are actually saving or losing in the long term. These simple calculations can help you determine which mortgage plan could be better for you and then make an informed decision.
A few key benefits of our mortgage calculator:
How does our mortgage calculator function?
Our mortgage calculator has been designed to provide a very good idea of future mortgage payments. We have set it up in such a manner that a simple entry of your purchase price can get you most of the information required. Once you have entered the purchase price, we will show you the different percentages of down payment you can make. It ranges from 5 to 20, with 20 being the safest bet.
After entering the purchase price, you will be asked to select a standard amortization period. The most preferred amortization period among Canadians is 25 years. This is a reasonable time to repay a large mortgage. The third step involves selecting the rate type. We provide a varied range of rates and fetch data from various sites to give you a state-wise insight into what you can expect in terms of mortgage and interest rates.Post the selection of the rate, your mortgage type will be displayed. The rate can be found for both monthly and bi-weekly payment plans. After selecting your province and city, you will be able to see the rates that are available.
What other features help our mortgage calculator stand-out?
A detailed projection of how your amortization schedule will look, how many monthly payments will have to be made and the amount needed to ensure it is smoothly done are all calculated in neat slabs of data. We even help you determine the right rate and type when you are looking to refinance or renew your mortgage. These details can help you truly understand the gravity of mortgages and the payments that need to be made.
Why choose us?
You can count on a Google 5 Star Mortgage Broker in Brampton, Rumy Gill to help get your Mortgage Approved !
Rumy Gill - Mortgage Broker
Google 5 Star Reviewed by Clients
When you have bad credit, getting a mortgage may seem … Continue reading The Facts on Getting a Bad Credit Mortgage Approval
As the Bank of Canada continues to increase interest rates … Continue reading What You Should Know About Mortgage Refinancing, Rates, and Terms
Congratulations you have you found the home of your dreams … Continue reading How Quickly Can You Get Approved for a Private Mortgage in Brampton