Mortgage or loan calculators can be a helpful tool for understanding the cost of a loan. They promise quick answers to your questions. But, can you trust them to give you the right facts?
In this guide, we’ll look at how they work, why you might use one, how reliable they are and other options you can use.
What is a mortgage calculator?
Mortgage / loan calculators are a tool you can use to help you understand how much you may be able to borrow and the costs associated with it. These tools are offered across a wide range of different finance products including:
- Secured loans
- Bridging loans
- Buy to let mortgages
- Residential mortgages
- Commercial mortgages
How do these calculators work?
Each calculator may vary slightly, but usually you enter details such as: your income, the loan amount, and loan duration. Once you have submitted these details, you will get an indicative quote based on the information you have supplied.
This quote could include:
- How much you might be able to borrow;
- Monthly repayments you would need to make;
- The interest rate you may get.
However, it's important to remember that these calculators have their limits. While they can provide a useful starting point, they might not uncover every detail.
When you speak to a lender or broker, they will gather much more information on your case, meaning you may get a different quote to what you saw online.
Why do people use mortgage calculators?
Mortgage and loan calculators appeal to people due to their speed and simplicity. They offer a quick way to estimate your monthly payments and see what you might be able to borrow. This gives you a better idea of what you might be able to achieve.
In addition, they can allow you to compare different loan options and payment scenarios, so you can see what might be best for you.
However, it's important to bear in mind that while they can be a helpful starting point, these calculators may not provide a complete picture of all the factors at play.
Are mortgage calculators reliable?
Mortgage and loan calculators can be handy for getting a quick estimate of repayment figures. However, their reliability relies on the accuracy of the details you provide. If you enter incorrect or incomplete details, the results will not be accurate for you.
Moreover, these calculators are usually quite basic, so they might not take into account scenarios that could impact your quote. For example, you may not be able to give details on your credit history, which can have a big impact on your loan offer.
Additionally, the market is constantly changing, and sometimes it can move very quickly. Some companies may not be able to update their data quickly. For example, when interest rates change, companies may not amend their calculators to reflect this for a while. Due to this, you may not get up-to-date figures.
Therefore, these tools may not be entirely reliable. Always make sure you use a mortgage or loan calculator as a guide, rather than looking at it as the absolute truth.
Why seek advice from a lender, bank or broker?
Rather than solely relying on calculators, you should consider having a conversation with a lender, bank or broker. These experts have a deep knowledge of finance products and can provide recommendations tailored to your situation.
When you speak to a lender, bank or broker, they will ask for some details about your situation. These questions will be more detailed than an online calculator, so you will get accurate results based on the information you have given.
Plus, they have an awareness of factors such as shifts in interest rates. Due to this, you will be able to get a more detailed and reliable understanding of what you will be able to borrow and the specific terms. Using these insights, you can make more informed decisions.
This is why it is crucial you get support from a broker or lender before making any big decisions.
Summary
To sum up, mortgage and loan calculators are useful tools, but they do have limits. Therefore, the information you get may not be entirely accurate or reliable. Seeking advice from financial experts ensures you get the full picture, allowing you to make better and more informed decisions.
