If you want to calculate the mortgage and know your monthly payment, you should know that the mortgage loan is not only made up of interest but also you must add insurance, opening costs and commissions, among others. Fill in the following personalized form and discover, for free and at the moment, how much you will pay each month and in total to the bank for the mortgage.
Mortgage calculator: What factors does it include?
The use of a mortgage calculator will allow us to simulate the payment we will make each month taking into account a series of variables. Once we have the result we can know the real cost that will be in our family economy and go to the bank to apply for financing.
- Interest rate: in a variable mortgage is the result of adding the index to which the mortgages are referenced (Euribor or IRPH) plus a differential (different in each bank). Therefore, the mortgage share will be lower the lower the differential. For a fixed mortgage loan the interest rate is the same throughout your life. The mortgage calculator, however, performs the calculation on the monthly fee considering a fixed interest, that is, the same interest during the years the loan lasts. In this way, if we want to calculate the mortgage rate it is better considering an average of the Euribor, for example at 3% (so we can predict if we can make the payment when the index increases since it are currently at a minimum).
- Capital: this is the amount of money that the bank will loan us. Nowadays banks finance a maximum of 80% of the lowest value existing between appraisal and sale. To get 100% financing we have two options: sign a mortgage for bank floors or have a financial profile above the average, with very high payment guarantees.
- Term: is the period during which we will have to amortize the debt. Currently, the average term that entities are offering for variable mortgages is 30 years and 20 years for fixed loans. Fixed-rate mortgages have a fixed-term first term (between 3 and 10 years approximately) and then a variable one, up to a maximum term of 30 years.
- Commissions: depending on the financial institution we can be charged more or fewer commissions when hiring the mortgage. Therefore, the mortgage calculator will help us discover the cost of the opening commission in case your mortgage has it. The entities that include this commission set it at around 1%. In such a way that in the mortgage calculator we must include the percentage and the minimum amount if it is specified.
- Related products: normally, with the hiring of the mortgage, a series of linked products will be added that the entity will demand to offer us a lower interest. The link can be insurance (life, home or unemployment) pension plans, credit or debit cards, in addition to direct payroll and receipts. If we have any of these links we must include the prices in the mortgage calculator to tell us what the final price would be.
Limitations of the mortgage calculator
Although the mortgage fee calculator gives us a fairly accurate approximation of the cost of the mortgage, it may also have some limitation and may not give you the exact figure.
This will be the information that the mortgage calculator can not provide us with:
- Changes in interest rates on variable mortgages: the mortgage calculator will not give the exact value of all the mortgage’s life installments, because you do not know how much the Euribor will quote in the future. Therefore, to calculate the amortization table of the mortgage, you should take an average value of the Euribor, which can be 3 %. In this way, if we see that the result we can assume we will be ensuring that we can pay all fees even if the Euribor starts to rise.
- Ability to borrow: all those who are thinking of buying a house and mortgaging must consider their financial capabilities to adjust them to the price of the house they can afford. The Bank of Spain recommends that the mortgage fee cannot exceed 35% of monthly income. The mortgage calculator will give information about the fee to pay, but it will not say if it exceeds the limits of our credit capacity.
If you think that you are paying more in your contract you can calculate the floor clause, in this way you will be able to know what is the amount that the bank has to return to you.
How can I be sure that I am contracting a cheap mortgage?
Before signing a mortgage it is advisable to check the conditions of several mortgage loans to make sure that we can face the debt in different cases and that the conditions that the bank asks for benefit us. Therefore, we should compare at least three mortgage loans and make numbers with an online mortgage calculator to know how much we would pay each month and in total with each product.
The differential is not the only thing that we must set when hiring a mortgage and may mean an error since the total cost will determine more variants. Therefore, we must observe the fine print and take into account the commissions, the linked products provided by the same entity, as well as the high opening costs.
A cheap mortgage will always be one that does not include any abusive clauses such as the floor clause since with it one ends up paying more. A very useful tool for those people who have the floor clause in the contract is to use the floor clause calculator. The information you will not provide us will be the amount of money we have overpaid for that abusive clause. This calculation can be done easily using one.
In this way, knowing how much money we need for the new house, that is, calculating the cost of buying a home and applying for a mortgage, will be much easier.
Is it better to hire a short or long term?
Many of those who sign a mortgage to finance the purchase of a home wonder what can be more on the account, if amortize the product in a short time or do it in more time. However, there is no single answer, since it will always depend on the employment and economic situation of each: some people will need more time to pay a reduced monthly payment, while others will be interested in paying off the debt as soon as possible.
To answer this question we can use the mortgage calculator changing the years of amortization:
- With a variable mortgage: the most interesting thing is to find a balance between a period as short as possible but that the resulting installments are comfortable to pay. If we say to pay the mortgage for many years, it would be interesting that the mortgage had no amortization fee, so the years can be reduced without additional costs. We must consider that the mortgage payments will be lower if we extend the term, but in return, we will pay more interest in total.
- In the case of a fixed rate loan: it would be advisable to choose the payment of the installment with a short-term to pay less interest, as long as the monthly payment does not exceed 35% of the monthly income. In addition, in this case, we would apply a lower rate since banks usually apply a lower interest rate for short terms.
Compare offers and then use the mortgage calculator
If we want to buy a home and finance it through a mortgage, the most interesting thing is to inform us of what the banks offer and start comparing, at least, between three offers. Thus, knowing what our financial profile is, we can find the best mortgage loan and, above all, the one that best suits our pocket. Then, knowing all the mortgage requirements, we can make numbers with the mortgage calculator.