Mortgage repayment calculator

Are mortgage calculators accurate?

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Mortgage calculators provide an estimate of your monthly mortgage payments based on the details you input, such as loan amount, interest rate, and loan term. While useful for giving you a rough idea, actual mortgage payments may vary due to factors like loan fees, taxes, and insurance. For a precise figure, it’s recommended to consult a mortgage lender who can include all relevant costs.

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How does a mortgage calculator work?

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Mortgage calculators use a standard formula to calculate the monthly payments on a mortgage. You input your loan amount (property value minus deposit), interest rate, and loan term. The calculator applies the formula, taking into account interest compounding over the repayment period, to give an estimated monthly payment.

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What’s the difference between fixed and variable interest rates?

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A fixed-rate mortgage maintains the same interest rate throughout the loan term, which keeps monthly payments consistent. A variable or adjustable-rate mortgage (ARM), however, may start with a lower initial rate that can fluctuate periodically, potentially leading to lower or higher payments depending on the market conditions.

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What factors influence mortgage approval?

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Lenders consider various factors when deciding on mortgage approval, including credit score, employment history, income stability, and debt-to-income ratio. They’ll also look at the property’s value and the loan-to-value ratio based on your deposit. Understanding these factors can help you gauge your eligibility and take steps to improve your chances of approval.

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Is it better to have a longer or shorter mortgage term?

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A longer mortgage term (e.g., 30 years) means lower monthly payments but more interest paid over the life of the loan. A shorter term (e.g., 15 years) typically results in higher monthly payments but reduces the overall interest, potentially saving you thousands. The right term depends on your financial situation and goals, with longer terms offering more flexibility and shorter terms leading to faster equity build-up.