The benefits of an interest calculator - The obvious benefit of an online interest calculator is that you can see for yourself how much your mortgage or loan repayment will cost you. The less obvious is the matter of the interest rate you type into the interest calculator. You can of course in a matter of seconds write down the cost of various interest rates by simply typing in a different rate into the interest calculator. The calculator does the calculation instantly so no need to do any maths.
Privacy is good - One major benefit of the online interest calculator is that it secures your privacy. If you are interested in finding out the cost of a mortgage or loan and you walk into a bank or have a mortgage broker visit you then people observe and know your business. The online interest calculator eliminates this public statement that you are considering a mortgage or personal loan.
Interest only Vs Repayment - In most circumstances Repayment is the best type of mortgage to have. However, the interest calculator illustrates the monthly payment difference with a simple clicking of the mouse to tick or untick the box Repayment and Interest only. This option feature is only applicable to mortgages as loans do not afford you the choice of simply paying off the Interest.
The dangers - There is a saying that suggests it is an ass that "assumes" and this may well be the case when using an interest calculator. There is a danger that you make assumptions when using the interest calculator to establish affordability. You may later discover that your mortgage lender or mortgage broker cannot offer you the mortgage interest rate you need to get the house of your dreams. Don't fall into the trap of taking out a bigger mortgage or loan than you feel comfortable with. Always providing of course that such an offer is made to you.
Interest rates - It would be folly to assume that the same low interest rates are available for personal or business loans than that offered with a mortgage. In the not so distant past this may have been the case but not since the global credit crunch. Lenders are desperate to claw back the billions "they" have lost and one way is to increase the lending rate. Lenders have resorted to increasing the rate by between 50% and 100% more than in the past. A personal loan of 6% in the past will now cost you between 9% and 12% and upwards.
Fees - One thing the interest calculator does not advise you of is the set up or arrangement fee attached to both mortgages and loans. The size of the fee can have an affect on the "actual" interest rate you pay so once again look at the bottom line to see how much it is going to cost you over the term of the mortgage or loan. So take into account that you will have to pay an arrangement fee for setting up your mortgage or loan and trust me the fees are far from being insignificant.
At last something for free - This article serves only as a little knowledge about this specific subject but you can download my book The Mortgage Bible (it’s free for a short while) which will arm you with almost everything you need to know about mortgages.
