photo credit: deanoakley

One of the most common searches on google, outside those for ‘adult content’ is for “Mortgage Calculator”.

I often wonder about this. What are people really searching for?

Mortgage Calculator number one will simply work out the cost of a repayment mortgage if you type in the mortgage amount, term and interest rate, which is OK if you know the details you want to investigate, and these are everywhere…actually, everywhere but here, maybe I’ll add one.

Mortgage Calculator number 2 is an Affordability Calculator. These are specific to each lender – so you input your details and it will work out how much they are happy to lend you, assuming credit and survey are both OK. You may think ‘just multiply your salary by 3 (or 4, or 5) but many lenders have a more sophisticated approach, factoring in children, couples and even earnings matter – a family of 4 with a parent earning £30k may get 3.5 x salary, a family of 4 with a parent earning £75k may get 5 time salary. Simply because they have more spare income after family expenses.

Mortgage Calculator number 3 is the one I pay a subscription for. Simple versions are available on many websites – other mortgage broker sites and comparison sites such as Moneysupermarket. To a certain extent they work, but they don’t answer questions, simply because the answers these days are so complicated, but they do give you a starting point to answer questions. Mine takes into account income multiples and other criteria, down to blips on credit records, state benefits etc.

Mine also has a very handy function – lets say we are looking for a 3 year fixed rate. Say 200 products come up to choose from, and some have lower rates with big fees and some have higher rates with low fees. Some have free surveys, some have free solicitors fees and some have little cashbacks. Which is best?

Well, you can get handy with a calculator (a normal calculator, not a mortgage calculator) and add up 36 payments (for your 3 year fixed rate)  and any fees and create a little spreadsheet. Of course, there is a risk -  it may well be out of date tomorrow, I update my software twice a day!

Or, you can find an IFA with the software that does the calculation for every product, at the press of a button. Cheapest may not be best, but the best will be amongst the cheapest and it gives you some solid facts to work from.

“Simples”, as they say…