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This mortgage calculator can be used to figure out monthly payments of a home mortgage loan, based on the home's sale price, the term of the loan desired, buyer's down payment percentage, and the loan's interest rate. This calculator factors in PMI (Private Mortgage Insurance) for loans where less than 20% is put as a down payment. Also taken into consideration are the town property taxes, and their effect on the total monthly mortgage payment.
Surely it can't be possible? To chop 100 big ones off your
mortgage without even trying? How about chopping a few years off
the term of the mortgage too, all absolutely free? Sound too
good to be true? Well, dear home buyer, get a load of this! We
will consider the UK for the purposes of this article (although
the principle is valid anywhere). First of all, let's remember
that the UK property boom is now well and truly over, and prices
are sliding (according to the UK's 'Land Registry', the official
source for property transaction figures), and have done so for
11 months straight.
Like all booms, this one went bust, and as it is a property
boom, the resultant crash appears to be in slow motion, with a
'water torture' of continuous falls, probably (if history is any
lesson!) for between 5 to 7 years. Sounds nasty? Not at all. It
in fact provides an opportunity for you to save yourself
hundreds of thousands, and literally years off your mortgage.
The average house in the UK has now dropped back down to just
below £170,000 and is heading south. So what, I hear you cry.
Consider the cost of servicing a £170,000 mortgage at close to
the long term UK average interest rate (we'll use 7% as an
example - actually 1% comfortably BELOW long term UK interest
rates!). Over 25 years, that property will cost you £1,201.52 a
month, each and every month for 25 years making a total cost of
£190,456 in interest. This means that after 25 years, you will
own the house, and it will have cost you £360,456. Surprisingly
large amount, isn't it? And here's where the REALLY interesting
bit comes in.
General inflation in the UK is running at just below 3%.
Assuming by some miracle that the realtor's preferred 'soft
landing' (stagnation) scenario happens, that still means that
over 3 years, prices will have effectively dropped by 10% or so.
And what if we get 'gentle falls' - say 5% a year? That adds up
to 15%. Add on general inflation, and houses in 3 years time are
likely to be, under this scenario, 25% cheaper than now. If
prices actually 'crash' as they usually do, in 3 years the
average UK house could be a measly £110,500.
This means you have already saved £59,500 simply by not buying
for 3 years. But wait, it gets better! Say you then buy the same
house as before, but this time at the new reduced figure of
£59,500. Lets also say you are comfortable with the payments at
$1,200 or so each month. Guess what. Hard as it is to believe
(and you can check this with any calculator or spreadsheet that
has an 'amortization' function!), You will pay £1,202.69 each
and every month for only 11 years, for an interest charge of
only $48,255.08. The final cost of the house, which is yours
after only 11 years, is only $158,755 and change.
Take a moment to think about that. You just saved £200,000 or
so, and paid off the loan a full 12 years before someone buying
an identical house today. Knock off (say) £36,000 in rent while
you wait for the market to fall, and you STILL save £175,000 or
so, for doing ABSOLUTELY NOTHING apart from waiting. Even if the
'soft landing' scenario somehow happens (maybe there IS a Santa
Claus!!!) you still save £17,000 upfront, and only have to pay
£1,200 or so per month for 18.5 years, meaning you only pay back
£120,264 in interest, for a grand total of $273,264 - a saving
of almost £90,000!
So. The choice is yours. Do nothing, and make a sweet £90,000 to
£200,000 profit (plus pay off your mortgage between 6 and 14
years early!) or be the 'last sucker in the box', and pay the
full amount! Bit of a no-brainer, really, isn't it?!
About the author:
Peter Parsons writes mortgage articles for www.mortgagedown.com , the
place to get advice on how to get your mortgage down to a
sensible size