How much mortgage can I afford?
What Is A Mortgage?
A mortgage is a legal act performed between two legal bodies where the debtor’s property is at stake and to be taken away and sold in case of failure to deposit the loan and interest in a prescribed period.
A person going for the mortgage should know about the fact that how much mortgage he can afford? He should know about the interest rate he is going to bear when having a Mortgage loan and what the consequences will be which are to be faced if he fails to deliver back money on time. In addition, he should also learn about some basic UK mortgage acronyms and terms.
Prime Calculations About Mortgage:
According to the studies, out of 100 percent of a man’s income, 20% of it goes in the form of fees, taxes, and utility bills, and about 25-28 percent of the gross monthly income goes towards the payments of premiums of insurances and monthly payments of Mortgage and other loans.
The remaining 50 to 52 percent are for your all other monthly expenses like grocery, shopping, traveling, vocational trips, etc. Some necessary bits of knowledge one should have are the uses and advantages of a mortgage calculator and some other techniques.
A person can examine the extent of a mortgage that he can afford in multiple ways: Mortgage Calculator, Rule of Thumb(28/36 Rule), etc.
The Four Main Variables:
Mortgage Calculator comprises four variables;
- Down Payment
- Loan Amount
- Interest Rate
Mortgage Calculator would help us analyze and predict a range of affordability and make some mortgage loan eligibility criteria.
Usage Of Mortgage Calculator:
One can use Mortgage calculator for various functions that can assist in numerous aspects of the Mortgage.
● Mortgage calculator can be used as purchase calculator.
● It may well be used as a refinance calculator.
● Mortgage calculator can be used as an amortization Calculator.
● It helps to find out when to get rid of the private mortgage loan.
● You may use it to plan early mortgage pay off.
Mortgage calculators are also useful in finding out that you will have 20 percent equity in your home. This percentage is the number when you can ask your lender to wave off private mortgage insurance requirements.
Mortgage calculator is also known as bank rate’s calculator, which is also worldly famous and understood due to its high credibility and functionality.
The 28/36 Rule:
28/36 Rule is a rule which can also determine how much mortgage one can afford? It also determines the range of debt that is required to pay your debt along with the loans (Mortgage and other), including your credit card payments.
Lenders generally consider 28% of your monthly income, going towards your house expenses, including your mortgage prices, taxes, and insurances. Once you add up everything, the whole sum should not exceed 36% of your gross monthly income.
This chunk of information would help you solve your queries and problems regarding using a mortgage calculator. That will ultimately make you aware of the affordability of a mortgage loan and will answer the question, “how much mortgage can I afford?“