Is there a crystal ball that you can look through and see how much your mortgage will cost you over it’s entire term?
Well, there is if you can fix your mortgage interest rate for the entire term of the loan – if you can’t and are taking advantage of short term fixed rates or variable rates that track the lenders or Bank of England interest rates then it’s a lot more tricky.
Our Mortgage Predictor lets you get a glimpse of the changes that occur when interest rates are at the mercy of your lender and the economy in general.
Using it you can enter all your mortgage details in and select your outlook on the future economy – from good to poor.
The calculator will adjust the rates depending on your choice and alter the mortgage payments, proportion of interest/capital and show you the changes.
Lets try this with a £100,000 mortgage, spread over 25 years at 3.5% for the first 3 years and reverting to 7.99% after – (assuming there is not remortgage afterwards) – and set the outlook of the economy to poor (getting into double digit interest rates).
You would start of with a £500.62 a month repayment – but end with a £742.58 when rates revert.
If the economy was poor the and the lenders rates hover between 12% and 16% the payments would fluctuate from £993 to £1,240 a month.
You would end up paying an additional £105,000 in interest.
Alternatively you could have a good outlook and in that case rates would stay low and you save £35,000 in interest.