Why Use a Mortgage Calculator? - Properly
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Why Use a Mortgage Calculator?

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By Corey Sherwood

When buying a house, you'll want to know how much your down payment will be before you start shopping for a lender. That's why there are mortgage calculators, designed to allow you to determine the monthly payments you'll need to make, based on your down payment, loan amount, and interest rate. They can also calculate your default insurance premiums and land transfer tax.

By knowing the payment you'll need to make on your loan, you can determine what is within your budget. You will then know how much home you can afford and where to begin looking for houses that are within your price range.

How to Calculate Your Mortgage Payments

In order to calculate what your regular monthly mortgage payment will be, there are three numbers that are especially important when using a mortgage calculator:


  • Mortgage amount: This is the total amount you are borrowing from the bank.
  • Amortization: This is the total life of your mortgage.
  • Mortgage rate: This is the interest rate you pay on the mortgage.

The calculator shows the best interest rates depending on your location; however, it’s possible to insert your own rate. The size of the down payment and payment frequency can be modified to see what the monthly payments would be. 

Now that you know how to use a mortgage calculator to determine what you can afford monthly on a home, here are some tips on how to get approved for a mortgage. 

How to Get Mortgage Approval

  • Determine a Comfortable Mortgage Payment Amount

Using a mortgage calculator, assess what you can afford to pay on a mortgage every month. This means that a mortgage payment should be within reach of your income, and not exceed it.

Many home buyers are accustomed to spending $1,000 or more per month on housing costs, but some spend as much as 50% of their monthly income just to pay off rent and the mortgages they currently have. Be realistic when deciding an amount that you can afford.

  • Know Your Credit

Make sure your credit rating is in top shape. You can check your credit rating for free, and this will help you to be sure that you have good standing with creditors before applying for a mortgage. A good credit score will reflect as much about your financial stability as it does about how trustworthy you are as a mortgagor. A good credit score indicates that you are a person who pays your bills on time and in full.

The main factors that lenders look at when calculating a good credit score for a mortgage:

- Your past ability to repay debts

- Any delinquent payments or bankruptcies on your record

- How much debt you already have compared to your available income

  • Obtain Proof of Income

Make sure you have proof of income for the length of your mortgage and at least 3 months after the period of any possible payments. Potential lenders may ask you for this, or they may decide to require it if you don't provide it during the approval process. You should also have proof that shows future income stability, such as employment contracts from all employers in the past two years.

  • Decide on the Down Payment

A down payment is an initial contribution to the purchase of a house. Plan on saving up to pay at least 5% of the home's value as a down payment. There are many assistance and grant programs available for first-time homebuyers

  • Talk to an Advisor

Speak to an advisor about what kind of loan is best for you. Your mortgage lender can guide you to a mortgage that fits your needs and gives you the most favorable interest rate, while still staying within your budget.

  • Understand Rate Options

Don't settle on the first rate you see. Shop around for the best rate you can get. When you speak to the bank or other financial institution, be sure to let them know that you want to see how competitive they are. They will usually run your application through a software program and tell you what your rate would be right off the bat. 

  • Learn About the Types of Mortgages

There are several types of mortgages available, and you should be familiar with them before you go shopping around for a mortgage. Learn how they differ from each other in terms of the interest rate offered and fees charged. A good mortgage broker will help you to determine which type is best for your needs. A professional broker can make sure that you get the type of mortgage most suitable to your needs.

When buying a house, you need to decide between a fixed rate and a variable rate mortgage. A fixed-rate mortgage is exactly that—a fixed rate for a fixed period. For example, a 30-year fixed-rate mortgage with a 2% interest rate would mean that your monthly mortgage payment will stay the same throughout the duration of the mortgage. A variable-rate mortgage is just the opposite—the interest rate is based on a benchmark rate, such as the prime rate, and can be increased or decreased over the course of the loan.

  • Get a Strong Pre-Approval Letter

Pre-approval may help you to better negotiate your loan terms. You can use a pre-approval letter as a financial cushion when buying or selling real estate. A mortgage lender will require information related to your credit record, assets, and current debt levels in order to issue a pre-approval letter. 

Using A Mortgage Calculator Is Just the Beginning

Buying a house isn't an easy or inexpensive decision—and if you're thinking about going down this path, you want to make sure you're making the right decision. You can't make a smart decision if you're not sure what you're getting into and no one wants to make a bad investment. That's why it's important to understand the basics of home financing before you start shopping for a home.

A mortgage calculator is the first step you should take when you're planning to buy a house. It will help you gauge how much money it would take for the down payment and monthly payments plus all other important criteria that need to be considered while taking a loan or applying for a mortgage.

Properly is a Canadian tech-enabled real estate brokerage transforming the home buying and selling experience as the only service in Canada that helps homeowners to buy before they sell.

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