With mortgage applications being an option for all adults over the age of 21, banks and lenders often receive thousands of submissions each year. Due to budgets, restrictions and policies many financial institutes are forced to reject potential borrowers and not only can this be quite upsetting to experience; it can also affect the applicant’s credit report, too.
As a result, many borrowers are turning to effective resources in the hope of maximising their chances at success. The truth is that as long as an applicant can demonstrate that their earnings can cover the cost of a home loan, then a bank will consider them – but there are other things that can be done to help with the process.
Some prefer to hire mortgage brokers and over the past decade, these financial experts have helped hundreds of borrowers to receive approval on their loan applications (not to mention being able to help them to find the best deal in the process). There’s another particularly effective resource that can be overlooked however, but when used properly, it can help to work out budgets and spending potential – both of which can be great benefits when applying for a mortgage in Australia.
But what is this resource? Well, you’ll be pleased to hear that they are free to use and readily available online; and they are even used by banks.
A mortgage lending calculator is fairly simple in nature and they can be invaluable where a loan application is concerned
How do these tools work?
If there’s one thing that most borrowers will want to know before they even approach a possible lender, it’s how much they can afford to borrow. Calculators can help to work this out by allowing a user to include information relating to the amount that they had in mind, their deposit, the current interest rates and the frequency of their repayments.
Once this data has been submitted, the user will be presented with a sum and it’s this amount that will need to be repaid each week, fortnight, or month (depending on payment frequency).
If the sum is too high, then the user can simply go back to the calculator, enter a different amount to be borrowed and then work out what the costs will be. Likewise, if the borrower can easily afford the sum presented, then they might want to apply for more in order to purchase a larger or nicer property. The calculator can still help until the ideal sum is calculated.
This amount will be accurate as long as the interest rate provided is precise. As these rates are prone to fluctuation (unless a fixed rate mortgage is applied for) it can be a good idea to return to the calculator often, as they do change. Alternatively, a borrower can estimate their own rates and include higher or lower ones – just to give them a better idea of what they can expect to repay.
Once the right amount has been ascertained the next step is to approach a lender, or hire a mortgage broker to do so on behalf of the client. With the right numbers in mind, the right loan can be applied for and the borrower will be in a much better position to demonstrate that they will be able to repay what they are provided, with interest.