Mortgage Calculators?

Question

These always come up with a figure way too low for the house we think we can afford
Anybody know the best way to work out what we can borrow
Obviously go to the bank but we wanted a realistic idea before hand

Sorry would help if I stated I am in the UK

Answer 1

I am not really sure why US residents offer help on the UK board with answers only fit for the USA. But i think if the calculators are telling you that you don't earn enough then you are either not putting your details in correctly, or you do not earn enough. Also some work it out on 3 times your salary and some as much as 5 times. It also depends on what terms you want to pay that mortgage back. There will be lenders who will squeeze you to the max but its dangerous given that interest rates are climbing so high- there is every danger of a collapse in the house market if the trend continues- then houses will be dirt cheap! Talk to many different lenders. You can ask for independant financial advisors to visit you at home, but don't sign anything until you have looked at all the options.

Answer 2

The general rule of thumb is to take your gross annual income and multiply that by 2.5 and then multiply the same number by 3. You should be able to comfortably afford a home 2.5-3 times your annual income.
If you want something more specific, try this:
1. Calculate your gross monthly income (line 1)

2. Multiply your gross monthly income by the housing ratio (line 2)
->now, the housing ratio is going to vary from lender to lender or by loan product. you can just use 29%...it's average

3. Multiply your gross monthly income by the debt-to-income ratio (line 3)
-> again, this will vary just like the housing ratio. you can just use 33% here. it's average.

4. Add your total monthly debt (line 4)
->your total monthly debt includes all outstanding balances such as sutdent loans, car loans, credit cards, personal loans and any other payment that has more than 10 months remaining in the life of the loan. DO NOT include utilities, rent, car insurance, health insurance, etc. (only include a cell phone if it is used in addition to a LAN line phone. if you use a cell as a home phone, it counts as a utility)

5. Subtract line 4 from line 4 (line 5)

6. Enter whichever is less, line 2 or line 5. This is your maximum mortgage loan payment allowed. (line 6)

7. Multiply line 6 by 20% (line 7)

8. Subrtact line 7 from line 6 (line 8) This is your maximum PI payment allowed...we took out the 20% as an estimate for your taxes and insurance, assuming that it's escrowed.

9. Divide line 8 by 7 (line 9)
-> the 7 stands for a 7.5% intrerest rate on a 30 year fixed loan...there's a whole factor table that goes with it, but this is just simpler.

10. Multiply line 9 by $1,000. This is the maximum mortgage loan amount.

I hope this helps. Let me know if it's unclear. Good luck!

Answer 3

I tested this one with my mortgage payment and it works fine.

http://www.bankrate.com/brm/mortgage-calculator.asp

You have to remember that it only calculates your Principal and Interest. You need to add in at least 1.1% Tax Rate. If your house is $500,000 then your tax per year would be $5500 / 12 months = $458.33 per month plus insurance which runs approximately $70 per month.

So use the calculator to get your Principal and Interest payment then add in your tax & insurance.

Most banks will loan you 45-50% Debt Ratio. Which means you take all of your total income before taxes and divide that by all your bills including the house payment.

For instance if you make $10,000 a month and your bills for your credit cards and car payments are $1500 and then you want to buy a house with a payment of $2800 (1500+2800= 4300/$10000) Your Debt Ratio would be 43%.

Hope that makes sense.

Answer 4

Anwser for US

Take half of your monthly income.

Example:

5000K monthly income
2500 disposable income

2500 is what the bank will let me pay on a mortgage and monthly debt including credit cards, car note etc.

Banks will allow up to 50% of your income to go to mortgage and debts per month. So in the above scenario, you would need a mortgage under 2500.00 and your debt would be 0.00 per month. If debt is not 0.00 per month, then subtract is from the 2500 and that is what your left with for a mortgage payment.

There are also stated loans where you can state your income, meaning not proving it. This is used usually for people who debt to income ratios are off a little bit.

The above is the formula you can use to find out what mortgage you can afford. Well that is what the lenders use.

Hope that helps!

http://www.myfinancialcorner.com

Answer 5

if you are in u.k , try any bank's web-site they have online mortgage calculator , Just you will get an idea.

i did the same, i put our salaries in , and all expenses and software will tell you how much you can afford.

put the right figures to get an realistic idea.

it worked for me...

Answer 6

call a mortgage broker who is fee free.Calculators are ltd.Knowledge of current market place essential.It should be free,they will do the shopping around 4 u. I have connextions if you like.

Answer 7

mortgage calculator is using the following formulas

m=1 compounded annually
m=2 compounded semi-annually (Canada residential mortg)
m=4 compounded quarterly
m=12 compounded monthly (US residential mortg)
m=52 compounded daily

yr=25 no.of years amortized, this is the question the bank would ask, normally yr=25, payoff faster yr=lower, payoff slower, yr=higher

n=m*yr
%int=annual percent interest the bank charge
int=%int/100/m
pv=mortgage principal

F2=equal payment factor
F2=[1-(1+int)^(-n)]

PMT=monthly equal payment
PMT=F1/F2

F1=interest portion of the monthly equal paymnt
F1=pv*[(1+int)^(m/12)-1]

Answer 8

I'd be happy to help you as a service, no cost, no commitment from you. My toll free number is 800 867-4812. It'll take about 5 minutes. Ask for Nancy

Answer 9

Try here,

http://www.mortgage101.com/Calculators/Index.asp?p=mtg101

Also if you apply online do it with a company like http://www.lendingtree.com , or http://www.lowermybills.com or http://www.eloan.com

they sell your contact info to 4 or more banks and they all fight for your loan. better rates that way.

Remember they all run your credit so be careful.

a site like http://www.getsmart.com does the same but doesnt run your credit. there owned by lending tree.