What mortgage repayment calculators are available and how do they work?

Mortgage rates in the UK have hit their highest levels for 15 years , with average two-year fixed-rate deals reaching 6.66 per cent on Tuesday, according to Moneyfacts. That follows the Bank of England ‘s latest interest rate hike to 5 per cent driving up the cost of borrowing and takes rates passed the peak seen in the wake of Liz Truss ‘s disastrous so-called mini-budget last autumn. It comes as average wages, excluding bonuses, rose by a record 7.3 per cent in the three months to May, compared with a year earlier. It was the same increase as during the previous three months and the joint highest since records began in 2001. Chancellor Jeremy Hunt used a speech at Mansion House in the City on Monday evening to call on employers to show more restraint to help rein in inflation and last month met with banking bosses in a bid to resolve the mounting crisis. After summoning executives from the UK’s leading banks and building societies to Downing Street, Mr Hunt announced they had voluntarily agreed to allow borrowers to extend the terms of their mortgages or switch to an interest-only payment plan on a ‘no questions asked’ temporary basis at no risk to their credit scores. He also said that lenders had agreed to implement a 12-month minimum timeframe before repossessing properties. Speaking to reporters after the crunch meeting, the chancellor said he was most concerned about families under threat of losing their homes and those whose payments could soar when their fixed-term rates come to an end. More than 80 per cent of British homeowners with a mortgage are currently on fixed-rate deals, according to trade association UK Finance , and around 2.4 million such agreements are due to expire before the close of 2024, leaving some potentially in line for a financial shock. The chancellor said he hoped his new, more flexible measures would ‘give people a lot of comfort and stop people worrying about having conversations with their banks when they are worried about their financial situation’. Mr Hunt and prime minister Rishi Sunak have ruled out ‘fiscal intervention’ in response to the latest step taken by Threadneedle Street to tame inflation, which remained stubbornly lodged at 8.7 per cent in May. The chancellor has reaffirmed that bringing that figure down remains his ‘number one priority’. His intransigence has been criticised by both Labour and some backbench Conservative MPs, who have urged ministers to order banks to do more to help under-pressure mortgage holders as concerns persist that interest rates could end up as high as 6 per cent by the year’s end. What’s more, some 1.4 million mortgage holders face seeing at least one-fifth of their disposable income eaten up by additional repayment costs, which are forecast to rise by £2,900 for the average household remortgaging next year, according to the Resolution Foundation . If you are concerned about staying on top of your mortgage right now, help is available in the shape of online repayment calculators, which are a quick and useful way to determine how much you can expect to repay per month. The formula involved in calculating repayments on a given mortgage is complicated but these tools take care of it for you, typically only asking you to enter the value and duration of your agreement and the present interest rate to deliver an approximate per-month figure. That said, most calculators only take into account the principal amount of the loan and the interest rate to deliver an answer, overlooking other expenses bound up in homeownership like insurance and property taxes. These added monthly outgoings will likewise need to be taken into consideration when determining what terms you can afford to commit to. Most high street banks and building societies offer their own calculators on their websites, links to which follow, while their staff in branches will be able to offer more tailored guidance and support throughout what can be a nerve-wracking business. Barclays Halifax HSBC Lloyds NatWest Nationwide Santander Alternatively, if you prefer more impartial advice, sites like Citizens Advice, Martin Lewis’s MoneySavingExpert and Which? are among those offering their own versions. Citizens Advice MoneySavingExpert Which? Perhaps simplest of all, you can also use Google: searching ‘mortgage payment calculator’ brings up a device to help you work out your approximate monthly costs and the maximum amount you could afford to borrow. It is worth reiterating that these tools are only as accurate as the information you give them, so make sure you are realistic in your assessments of your finances and do not be afraid to seek professional advice.