Calculators
How much (really) is that mortgage in the window?
The good news: a good calculator is the Superhero of the electronic world - capable of answering complex mathematical questions instantly.
Medburn Street, NW1: pleasant and leafy and a hop and skip to EuroStar (note the turreted outline of St Pancras Station behind the terrace on the right).
The bad news: a calculator does not know you personally and can not make suggestions or recommendations based on all of your particular circumstances.
They do not know your attitude toward risk or the truth about your job security.
They do not know how soon your boiler is going to pack in.
But provided you are aware of these limitations, even the bad news is not so bad. Electronic calculators can help you to find answers to some basic questions:
What is the largest mortgage for which you qualify?
How much interest will you pay monthly, over the entire year, and over the full term of the loan?
How much more will you pay or save for every fraction that the rate changes?
Which mortgage is best for you?
Will you save money with a flexible mortgage and, if yes, how much?
How much can you afford - as opposed to how much of a loan will you qualify for?
Where Are They?
Electronic calculators are abundant: on the websites of banks and building societies, other mortgage advisors and lenders, money advice sites, governmental organisations, newspapers and others. An internet search on the term 'calculator UK' reveals thousands of sites.
Calculators are also available in books and magazines, usually as fill-in charts or lists. Old-fashioned pencil and paper can sometimes concentrate the mind and jog the memory better than a computer can.
GIGO
Although computers crunch numbers with absolute precision, calculators are only as good as the information they are given. GIGO is a computer saying: garbage in, garbage out. Give a calculator the wrong or incorrect data and it will provide the wrong or imperfect answer.
Best practice: Find a comprehensive calculator and feed it everything it wants and needs accurately.
Do you smoke? Have children? Commute to work? The more demanding the calculator, the better it calculates your specific expenses. The Which Guide: Buy, Sell and Move House contains a useful affordability table.
From Very Simple to Very Detailed
How much money do you spend? For budgeting purposes, your expenses consist of daily (for example, food and travel), weekly, monthly or quarterly (such as utility bills), periodic (petrol) and annual (insurance, TV licence). The FSA (Financial Services Administration) website chart can help you determine the amount of money available to you each month.
'Difficult?' Don't know the meaning of the word.
Five or six per cent. 5.25 or 6.25 per cent. Even 6.0255 per cent. The computer doesn't care. It can handle complicated numbers as easily as simple ones.
Calculators can crunch different kinds of numbers. For example, you can tweak interest rates to see how much more or less you will have to pay if rates go up or down - and you can do this for any and all interest rates that interest you.
One kind of calculator allows you to compare different kinds of mortgages as well as different rates, and another kind enables you to compare repayment versus interest-only mortgages.
You can easily determine the monthly repayment amount for, say, a 15-year repayment mortgage, and compare that amount with a 20-year or 25-year mortgage.
Equity Release
Calculators can also tell you how much money you can release from your home via an equity release scheme.