This calculator allows you to input the details of your mortgage and work out how much your repayments would contribute to the debt and principal of your purchase.
Taking out a mortgage is one of the largest financial decisions you are likely to make in your life. Far too few people take the time to consider not only the implications of this decision, but also take the time to think about when the optimal time might be to do so.
The largest factor to take into account is the interest rate you'll pay on your mortgage - as the calculator shows, for the first half of your mortgage term at least, this will represent most of the money you're paying back! Of course - this is a lifestyle decision as well as a financial one.
It's therefore incredibly important to start making some projections before you take out the mortgage. Or, if it's too late, once you've taken it out and need to know how much you might have to pay. Bear in mind that the number one mistake people make is taking out a mortgage at a low interest rate and not being able to keep up payments when rates go up.
You should be stress-testing your repayments at different rates. Look over the interest rate environments that we've been in for the last few decades. Can you withstand the highest rates? What would happen to your monthly repayments?
If it's too late and you've already started the mortgage, you can start to think about your rainy day fund, how long you'd be able to keep up payments if rates increased to different levels, and how you can start preparing for this eventuality. It's always best to build a roof when it's sunny, rather than when it starts raining. Remember, the market can remain irrational for longer than you can stay solvent, as the old adage goes, so it will be necessary to build up as much of a buffer as possible.
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Using the input fields above, you can play around with different rates, loan terms and repayment amounts to settle on something that is manageable and well within your remit. One thing to note is how much of your repayments are interest! For the early part of the mortgage, you'll mostly be repaying interest rather than principal, and as time goes on this will reverse until you have all the interest paid off.
Note that it is sometimes a good idea to intentionally overpay, if this is something that is possible, in order to have no debt. It may also be a good idea to do the reverse. If your interest rate is 3% and you can get 5%+ safely from investing in stocks, you'd be better off doing that and keeping your repayments low. All comes down to personal preference!
The Strabo mortgage calculator is a great little tool for one off calculations. That being said, it is an important part of managing your property on Strabo. For the full suite of features, make sure to sign up to the Strabo platform and use your real data as part of a holistic Net Worth Tracker.
