After you have made the judgment to acquire a mortgage you must be able to determine the amount you can afford to pay
You can do this by performing a mortgage payment calculation. There are certain considerations when you calculate mortgage payment levels that suit you that you need to keep in mind: How much mortgage can I afford? What type of mortgage should I get? What kind of loan payment schedule suits me best?
As always it is best to start at the beginning. How much mortgage can I afford: This is an easy question to answer, but you must not delude youself. Be completely honest! Look at your earnings and savings and your expenses. How will these be affected by a mortgage? Some expenses like rent will disappear when you are a homeowner but a mortgage will bring other expenses (you may have removal costs and you'll almost certainly have legal costs). An online financial calculator will allow you work out exactly how much you can afford to commit to in a mortgage.
Now you need to determine the type of mortgage which best suits your requirements. There are various types of mortgage but don't let this put you off - the choice makes it easier to find a mortgage that suits you best.
The two most common types of mortgages for homeowners (commercial mortgage rates are applied to business premises) are repayment mortgages and interest only mortgages. You can also have a combination of the two.
A repayment mortgage allows you to repay a part of the mortgage loan each and every month but an interest only mortgage just pays the interest and the capital loan remains the same. When you consider what type suits you remember that an interest only mortgage rate (always calculate loan interest as well) will be considerably smaller. Although this will appear attractive you will need to be able to pay of the rest of the loan at the end of your loan payment schedule. You can do this by investing money - but poor investments will lead to a shortfall and you will need to take advice at how to invest money so that it grows with your mortgage.
When you have found a mortgage that matches your requirements there are still further issues to consider. What are the exact costs when the mortgage closes? These might make the final amount you pay much higher - especially if you pay your mortgage offer quicker than the original loan payment schedule. Are you able to claim any discounts like small business tax deductions? What are the bank loan rates (an interest rate calculation will help you here)? You might also be affected by mortgage loan origination - check your mortgage provider is dealing with your mortgage themselves and not farming it out as this may increase the amount you pay. It is always best to shop around and find the best deal!
When you calculate mortgage payment levels that suit you should know what you can afford. After that it is easy to calculate a payment that is tailor made to suit you best.
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James Grantworth is the Marketing Director for Let Mortgages Limited providing
Buy To Let Mortgages with minimum capital investment. For details of our no money down Buy To Let Mortgages visit:
http://www.letmortgages.com
