If you’re considering taking out a homeowner loan, a home loan calculator can help you work out how much your monthly payments will be.
Why is this important? Well, it can help you calculate how much you can comfortably afford to borrow. This, in turn, will make it easier for you to budget for the new payments and avoid the risk of applying to borrow more than you can afford – and being turned down.
Read on to learn more.
What is a homeowner loan?
If you’re applying for a loan, a homeowner loan is one of the options available to you – providing you’re a homeowner. This type of loan is secured to your property, which is why it’s also known as a secured loan.
Homeowner loans usually let you borrow more money at a more affordable rate than personal loans because the lender has the added security of your property.
And because your repayments are spread out over a longer period than they would be with a personal loan, they may be more affordable. However, because you’re making payments for longer, you could end up paying more interest overall than you would with a personal loan.
The biggest risk to be aware of when you take out a homeowner loan is that if you stop making your monthly repayments, the lender has the right to repossess your property and sell it to get back the money you owe them. If you think you’ll struggle to keep up with these repayments, a homeowner loan may not be the best option for you right now.
More than just a calculator
Before you apply for a loan, you need to be sure you can comfortably afford the repayments. If you can’t, you could find your finances become stretched and may spiral out of your control.
However, working out what your repayments will be before you apply can be tricky, as you need to factor the APR into your calculations. That’s where a loan calculator can help, as it does this for you.
Take the Ocean homeowner loan calculator – you just type in the amount you want to borrow, the length of time you’d like to spread your repayment across and the APR you’ve seen advertised. The calculator then tells you what your monthly payments could cost you and how much interest you’ll pay in total.
Of course, what you’ll end up paying each month will depend on the lender you ultimately go with and the APR they offer you. But the results you get using a loan calculator can be a useful guide.
If it turns out that the amount you want to borrow will end up costing you more each month than you thought, you could consider applying for less or spreading the repayments across a longer period – although this could cost you more in interest. Either way, you’ll be able to consider your options before you apply.
Try before you apply
But just why is it so worthwhile using a loan calculator before you apply for a loan? Well, lenders will consider several things when you apply to them for credit, like your credit history, for example. And one of their big considerations will be whether you can afford the loan you want.
If they think that you will struggle to make your monthly repayments, the lender may turn down your application. This will leave a mark on your credit history that could work against you when you apply for credit again.
Or, the lender might accept your application but in return for a higher APR, which will make your payments more expensive than you were expecting. You’d then need to look at your budget again to make sure you keep on top of your repayments.
With a loan calculator, you can get a good idea of how much the loan could cost before you apply. So, if you’re thinking of applying for a homeowner loan, why not give Ocean’s loan calculator a try today?
Disclaimer: All information and links are correct at the time of publishing.