4 unbeatable benefits of using a mortgage calculator

Thought a mortgage calculator was only good for figuring out monthly payments? Think again! Here are fourunbeatable benefits to help you start reaping rewards.

This is a tool available on the websites of most banks and financial institutions, as well as through mortgage brokers. First and foremost, a mortgage calculator can figure out the amount to be paid on a potential mortgage by entering information such as the:

• Value of the property
• Down payment amount
• Loan term
• Depreciation value
• Interest rate

This wonderful tool allows you to anticipate if your budget will allow you to buy a house, and if so, at what price. Mortgage calculators assist you in making informed decisions when house hunting and searching for a property.

If you realize that you cannot afford to buy a home, mortgage calculators also allow you to know how much you will need to save to get there.

By calculating variables including interest rates, amortization and a down payment, you will determine which options represent the best value for you. This is an asset when negotiating a mortgage.

By experimenting with different scenarios, you’ll have a better understanding of how mortgages work and the criteria on which banks base their calculations. You’ll be able to decide on the repayment period and the maximum interest rate you can afford. Therefore, mortgage calculators make it easier to choose and negotiate your terms.

Since you can do the calculations yourself and estimate your own borrowing capacity, you won’t have to consult with a banker or broker just to see if you qualify. Mortgage calculators allow you to make side by side comparisons while evaluating different scenarios.

Aside from a basic calculator used to figure out monthly payments, there are other ways these types of calculators help with financial planning:

• Calculate your borrowing capacity depending on your current situation (assets, liabilities, expenses, income, etc.), using the same criteria banks do.
• Calculate amortization over time: some calculators show the effect of depreciation on your payments over time and the total cost of your loan at the end of the term.
• Calculates additional payments: it calculates the effect of additional repayments or increasing your payment amount to pay down your mortgage faster.
• Compensation calculator: the costs that apply to prepayments with respect to your mortgage.
• Premium calculator: CMHC has a calculator on its website to determine the amount of premiums, if applicable.

As you can see, it's not just a simple calculator. When planning to buy a home, re-negotiating your mortgage, or planning any other major changes, a mortgage calculator can be your best friend!