Mortgage affordability comparison calculator

This calculator helps you estimate how much you can afford to borrow to buy a home, based on your current income and expenses, for a maximum of 2 partners. It also allows comparison of two fixed-rate mortgage offers of your choice (2yr vs 5yr, 5yr vs 10yr, etc.), highlighting:

• The different financial impact in terms of monthly repayment and remaining monthly budget
• The relevant degree of risk (low, high, very high, default)

The tool also provides the ability to verify the impact of rate changes, recalculating mortgage monthly repayments accordingly. Also included, for added flexibility, is a field to factor in any extra monthly repayments possibly allowed under your mortgage deal. Finally, you can simulate the impact of a future sale, with automatic calculation of capital gain/loss for each partner, in proportion to their respective contribution to the original cash deposit.

For a more realistic calculation, you can input an estimated inflation rate, applied by the model to both income and costs for the calculation of the remaining budget in future years, as well as the estimated property value at the time of sale. Leaving this blank will show the calculation in today’s money, resulting in a more conservative outlook.

Included in the model is also the possibility to simulate the break-even level of the new interest rate applicable on expiry of the shorter term (i.e., when the net financial impact of the two fixed terms is neutral). Above this level, opting for a longer fixed term would prove more profitable, besides offering longer stability, by delaying credit worthiness, LTV, and affordability reassessments typically associated with remortgaging.

Required fields are in white cells, whereas cells with a blue background contain formulas.

A fixed-rate mortgage is usually the most popular choice, particularly with first-time buyers. The interest rate will be fixed for a certain period of time, meaning your monthly repayments will stay the same until the fixed term ends, providing greater stability and making it easier to budget than a variable-rate mortgage. The timeframe can vary from 2 years up to 10 or even 15 years in some instances. This means that if you are, for example, on a 30-year mortgage, you will face the possibility that your lender, at the expiry of the fixed term, will revert to a variable interest rate—unless you can renegotiate for another fixed term (usually the better option, as a standard variable rate could be much higher). On the other hand, with a fixed-rate mortgage, you lose the ability to take advantage of market rate cuts. If keeping a constant monthly repayment over time is your priority, a fixed-rate mortgage is the way to go.