All of us dream of the day that we would be able to afford our own house. It does not necessarily have to be a huge mansion with staff areas, a swimming pool and a tennis court, even a modest beginners house would do! With the excitement of a new house comes a lot of responsibility and expenses and it is crucial to first plan your finances carefully and find out if you will be able to have the funds for your own place.
Using a mortgage calculator which is available on web sites of many banks, mortgage companies and other finance institutions, can give you a good idea of the size of mortgage loan that you will be able to afford.
A mortgage calculator works as follows: Firstly you insert your month-to-month income into the required area. If you’re married, this will be the combined income of yourself and your husband or wife. Then you generally have the choice of selecting to settle the mortgage over 2 decades or 3 decades. Lastly you insert the current interest rate and when you press enter (or confirm or submit, depending on the website), you’ll be able to see what the maximum loan amount is that you are eligble for and what your monthly home loan installment will be if you choose to obtain the maximum loan amount.
You should realize that a mortgage calculator is purely a guideline and not an assurance of the actual home loan amount that the loan provider will grant you. A number of other factors will also influence the size of the home loan you are eventually offered. The calculator works on a best case situation and has no idea of your month to month expenses, your credit score or your employment history. These factors will be considered by loan companies and your actual allowed mortgage might be drastically lower than what the mortgage calculator predicted.
Even if the banking institutions are prepared to offer you the maximum loan, you still need to calculate if you will be able to afford all the other payments associated with owning a home. Your monthly bond payment is surely the most important expense, but then you also have to think about items such as electrical power and water, rates and taxation, insurance and garden services, only to mention a few.
Also remember that the insurance rate can change at any time and if you get a home loan at the absolute maximum amount that you can afford you will certainly end up in huge trouble. You may even lose your home during this process! Rather take the responsible approach and start with a basic property. Any home is an investment and you can always sell your home and buy a bigger and better place when you are financially secure.
In conclusion, don’t choose your dream home purely on the figures obtained by a mortgage calculator. Although it can give you a fairly good idea, other elements will also have an impact on your ultimate mortgage amount.


