Possibly the most important thing to consider when you are buying a new house is how much you can afford to pay; and a mortgage calculator takes much of the difficulty out of this process. They are simple to use and easy to find on the internet. Although they do not guarantee that you will able to borrow a given sum of money (agreeing that is down to your mortgage provider) they are an extremely useful first step in establishing a rough figure.

Types of mortgage calculator
There are, broadly speaking, two different types of mortgage calculator. The first kind asks you for your annual salary, or a combined salary for a couple, and returns the size of mortgage you are likely to be able to borrow on that amount. Some will deduct your deposit from the total because you are not actually borrowing that money; otherwise, you will need to take this into account yourself. You could say that this kind of mortgage calculator looks at the issue from the point of the bank or building society: given this salary, how much would it be safe to lend?

The second type looks at the problem from the other side and seeks to establish how much your mortgage will cost you in monthly repayments. You input the amount you want to borrow, the term of the mortgage – which could be up to 25 or even 30 years – and the interest rate at which you will be repaying.

Points to remember
The most important point to remember with the monthly-sum type of mortgage calculator is that the calculation depends on the interest rate you put in. Whilst at the moment interest rates are historically low, and are likely to go even lower, a mortgage is a long-term loan and you cannot count on them staying low forever. In the past the Bank of England base rate has been as high as 15%. Needless to say, this will make an enormous difference to the calculation and could easily mean the difference between being able to pay and defaulting on your mortgage. That is not to say you should base your initial calculation on a high interest rate, because there are options along the way if rates do start to rise (like remortgaging on a fixed-rate deal, if you are not already). However, you should build in a little slack.

The other point to remember is that this is a guideline only. Your actual repayments will depend on the type of mortgage you end up with. Buy-to-let mortgages tend to be more expensive, for example. Other factors, such as arrangement fees (if you go through a broker), or whether a broker can secure you a special deal, as some can, will also make a difference to the final payment amount. However, mortgage calculators are a useful first stop to give you some peace of mind about your decision before you apply to the mortgage company.