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Mortgage reckoner

Mortgage ready reckoner

To work out what you can afford to borrow you need to know what the likely repayments will be. It is easy to work out the approximate cost. See the Mortgage Calculator. Unfortunately, lenders work out their repayments in different ways and precise repayment figures vary slightly depending upon the Building Society or other lender chosen. All lenders will provide a written quotation on request.

Tax relief

Up to 6th April 2000, tax relief was available on interest paid on a loan taken out to purchase a "Principal Private Residence".  however this has now been abolished.

Monthly repayments

You can use the table below to calculate roughly how much a proposed mortgage would cost.

What can you borrow?

Lenders normally calculate their maximum loan by reference to a multiple of the borrower's earnings. All lenders have different methods. Commonly lenders will advance two and a half or three times the borrower's income. In the case of joint borrowers, the loan could be, say, two and a half times the main income, plus the secondary income. Rarely will a lender advance more than the value of the property. A valuation will be carried out. Some lenders will lend a maximum of 95% of their valuation. When deciding how much you can borrow, it is vital to work out what repayments you can afford. We feel that there are some borrowers who will lend people more than they can afford to repay. This can attract criticism, but it does go on.

Changes in Interest Rates

Usually the lender has the right to vary the interest rate payable. Sometimes mortgages are arranged with a rate which is fixed for a certain period. Whether this is good or bad for the borrower depends on how rates generally perform. When you budget remember that you ought to take into account the fact that rates might increase and set your sights so that you can in fact cope with an increase. Rates do of course go down as well as up depending upon the economic situation and other considerations.