UK Mortgage

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UK Mortgage Calculator 

When borrowing money to help finance a home purchase deal, you may opt for a mortgage because it tends to offer lower interest rates and it may extend over a long period allowing you ease the burden for paying for the loan. However, as much as a mortgage may seem attractive, you also want to know that it is just part of many other expenses you may be living with. The cost implication of a mortgage is not something many people understand and that is one reason why people find themselves in financial difficulties once they have taken a mortgage. There is every reason for you to make a sound financial decision when borrowing a mortgage in UK and one tool that you may find very resourceful is a UK mortgage calculator.

A mortgage calculator is not just a tool for providing you with values and numbers, it is a something more than that. It helps in many different ways including estimating the amount you may be approved for a mortgage, the suitable loan amortization period, and the best interest rates in the market. It can help you in coming up with a budget that allows you to repay your mortgage with ease.

 Why You Need a Mortgage Calculator

There are obvious reasons for using a mortgage calculator one being that it allows you to easily determine the amount of mortgage you should borrow and the interest rates applicable. It also helps you compare the different mortgage deals available in the market because different lending institutions will offer different rates and charges.  When you use the loan calculator, you are in a position to know which mortgage works for you and which lending institution you should work with. A mortgage comparison can give you the best deals meaning you get the best rates.

Many a times, people only see the mortgage amount as directly correlating to the price of the home they want to purchase, but there are costs you should be wary of. When taking a mortgage, you want to evaluate all the risks involved including the costs and expenses that may not directly be pointed out when borrowing. A mortgage will come with other related costs and charges or fees. It is also just one of the expenses that you will be meeting because you have to live your daily life that means you have other financial obligations to meet. You could also be having another loan for example, a home improvement loan or a car loan that you are paying. All these are costs that you need to consider carefully and a mortgage repayment calculator is going to assist you come up with an appropriate budget so that you don’t struggle to repay the amount. 

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Mortgage Costs

A mortgage comes with other costs and the obvious one is the interest rate you pay against the principal amount. Apart from the interest amount, there are other raft of fees, taxes, and charges that you may have to pay before and after you get the home loan. You need to factor in all these mortgage costs when buying a home so that you don’t find yourself in an awkward position.

Before you take the mortgage, there are fees that you pay to the lender and you will find that most mortgage products in UK have at least one fee if not two or three. The mortgage arrangement fee and the mortgage booking fees are two typical fees that you will pay to the lender. The arrangement fee use to cover the lender’s administration costs, but now, it has become a crucial part of the cost of mortgage besides the mortgage rates. Sometimes, the arrangement fees may be termed as the product fees or the application fees or the booking fees.    

When you use a mortgage calculator UK tool, and you want to budget for the repayment of the loan, see that you consider the various mortgage costs.

As the homeowner taking a mortgage, you should be wary of lenders that offer you low rates to disguise their high fees. You may find some lenders charging fees as high as £2,000 or more, but when it comes to the rates, they look so attractive. What they do is that they have cunningly tried to lure you with the low interest rates, but they trap you with the high charge fees that you may not be aware of. Depending on the size of the loan you want, sometimes, you may find that a high fee- low rate deal is more attractive and cost efficient than a low fee – high rate deal. Higher fees may be seen to work better for larger loans.

Also, be careful because a lender will provide you with options of paying the product fee or arrangement fees. It may be upfront, where you pay at the time you are getting the loan or you may add it to the mortgage. If you add that amount to the mortgage, it will be charged interest and it may create more burden to you in the long run. There is also the disadvantage of paying upfront because you may lose the arrangement fee you pay if something goes wrong with the home purchase deal. The trick here is that you should add the arrangement fee to the mortgage loan, then immediately the home purchase deal matures, you pay off that fee immediately so that it’s not charged interest together with the loan. Even when you use the mortgage calculators, it may be important to seek the help of a mortgage advisor to give an insight on the various fees and charges that may be imposed on your loan because some may not be disclosed to you at the time of applying for the loan.

When you add the fees onto the mortgage, it is going to protect you from losing some or part of the fee you pay upfront if the mortgage does not materialize or go through for any reason. Sometimes, lenders may prevent you from adding the fee to the mortgage and paying it immediately after the mortgage deal goes through, so there is also another trick you can use which is overpaying the mortgage. Many mortgage lenders will allow borrowers to make over payments of up to 10% without imposing overpayment penalties. That should be fine with you if the other option does not work out.


Lenders may also charge what they call booking fees to help secure a fixed-rate, discount deal, or tracker. This may amount to about  £100 to £200.

Apart from the mortgage fees, there is also the stamp duty that is paid to the government. It is a form of tax that property buyers pay to the government when they buy property. Stamp duty may not be levied on properties that are of £125,000 or less, so you want to think about that and know when it applies because it is going to have an effect on the cost of your mortgage. Do all your mortgage cost properly and take advantage of the loan repayment calculator to help you make a wise decision. You should also know that the mortgage calculator you use may not factor in some of the cost of the loan, so you to do your research well.

Other costs involved are such as conveyancing fees, land registry fees, relocation expenses, services charges, and upkeep.

 How to Use a Mortgage Calculator

A loan repayment calculator will help you in different ways whether you are borrowing a mortgage or you already have one. If you want to know the amount you will pay every month, you will enter the amount of loan you want to borrow and the interest rate. In case you already have a loan, and you probably want to know how a rise in interest rate is going to affect your payments, you can use the calculator. A mortgage affordability calculator will require you to provide information such as the your income details including salary, pension, and bonuses; information of payments you make on other loans such as personal loans and credit card payments; other outgoing that you have such as council tax, maintenance costs, monthly travel, and insurance.  Depending on what you want to compute, these is usually data that you have to feed in to the loan calculator and it will give you the results in just a few minutes.

If you want to know the monthly payments, total payment, and the total interest paid, you may enter data like the mortgage amount, the mortgage term in years, and the interest rate in a mortgage calculator like that provided by nationwide mortgage. 

Buy-to-Let Mortgages

When you talk of buy-to-let (BTL) mortgage, it’s a form of mortgage that applies to property buyers buying to rent the property. While the rules for applying for the loan as similar to those for the normal mortgages, there are some different. You will find that with the BTLs, they tend to attract higher interest rates. When seeking to get a BTL mortgage, you want to use a loan calculator to determine how much to borrow depending on your financial situations. You may get a BTL mortgage if you want to invest in flats or houses and you can afford taking the risk of investing in property.

With buy to let mortgage, it’s mostly interest only meaning that you are not paying anything each month, however, at the end of the loan term, you will repay the principal or capital in full. The fees for applying for these mortgages are much higher and there is age limit for the mortgage. If you are taking buy-to-let mortgage, you should plan for times during which there may be no rent that is coming in. So don’t assume that there will be tenants occupying the property all the time, and at times, the tenants may not pay the rent as agreed. So, make sure you plan for these eventualities. Also, don’t rely on selling that property to repay the loan. If you fall into this trap, it is going to hurt you. The prices of the houses may fall and this means you may not get sufficient amount of money to repay the loan. In case the prices are down, you may have to make up for the different on the mortgage balance.

Investors may houses to let may want to consider other costs like tax. If you purchase a house to let for profit, you are required to pay what is known as the Capital Gains Tax, especially if you exceed the threshold provided. A rent income which is more than your mortgage interest payment or some allowable expenses may be levied Income Tax. A buy to let mortgage calculator can help when you want to find the amount you can borrow and how the loan is going to cost you.

Calculating Mortgage UK Manually

The easiest way to calculate a mortgage is by using the calculator, however, if you want to do it manually, you may use this formula:


In this formula, “M” stands for monthly repayments and “P” denotes the principal amount. The “r” stands for the interest rate and the “n” represents the term of the loan or the period in which you are repaying the loan.

Remortgaging or Refinancing your Mortgage 

Remortgaging helps you reduce the cost of paying for your loan. It allows to get a loan with a lower interest rate thereby ensuring you comfortably pay for your mortgage. You can find out the most suitable mortgaging deal by using a remortgage calculator. A remortgaging calculator helps you find out if you will be saving money by switching to a lower interest rate mortgage. Borrowers need to realize that if they consolidate their short term debts into a remortgage, they may increase their interest rates if they are repaying for a longer term. A remortgage is a situation where a homeowner takes out a new mortgage against their property to replace the current mortgage they are paying with a better term loan or to borrow against the property. It is estimated that about a third of home loans in UK are in form of remortgages.

A remortgage is suitable for you if the current mortgage deal is just about to end. You will find that most mortgages will last a short time, let’s say two to five years – which is the typical length of loan repayment offered to tracker, discount, or fixed rate mortgage. After that period, you are put on the standard variable rate (SVR) and in some cases, the SVR may be higher than what you have been paying. A remortgage can allow you to switch to a better loan rate. You can also consider a remortgage if the value of the home has gone up or if you are worried that interest rates may go up. If you want to switch from the interest only to the repayment form of mortgage, you may as well think of remortgaging. So if you want to offset mortgage, there are many ways to do it including remortgaging for a cheaper interest rate loan.



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Value added tax (VAT) is a consumption tax system applied in the United Kingdom. It is considered the third-largest revenue earning source for the national government after the income tax and the National Insurance. VAT was introduced back in 1973 and it collected by HM Revenue and Customs. This tax system applies to a majority of goods and services that are provided by businesses in the UK. It also applies to some imported goods and services.

This consumption tax is an indirect tax that is charged to the consumer but paid by registered businesses. The tax is seen as a consumption tax because it is usually charged on items bought by people, and by indirect tax, it means that it’s collected and remitted by businesses rather than the people who pay the tax.

VAT Rates

The standard rate of value added tax in UK is 20% and this rate applied to most of the purchases made by the consumer. Businesses should also be aware that there are some other VAT rates that are applied in the United Kingdom. For example, there is the reduced rate VAT that is charged on things like sanitary products, children’s car seats, energy saving measures and others. This reduced rate is charged at 5%.

There is also the zero rate, which means that a 0% rate is applied on specific goods and services. For example, zero rate VAT applies to most books, children’s clothes, newspapers, and food.  While there is no amount charged on these goods, businesses are required to record and report zero rate goods on their VAT return. In addition to that, there are items that are considered exempt. For example, financial and property transactions, and postage stamps are exempt items from the tax.

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In 1973, VAT replaced the Purchase Tax. In the Purchase Tax, tax was levied at the production and distribution levels and not at the selling level, as with the case of VAT.

Because VAT rates can change, businesses should be updated with the current applicable rates and ensure that their invoices and accounts are also updated. Business owners can use VAT calculators to get the right amount of tax that they should pay. The VAT calculations are programmed to incorporate the current VAT rates.

The 20% VAT rate was introduced on 4th January 2011 and before that the rate was at 17.5%

Who Pays VAT in UK

VAT in the UK is charged, collected, and remitted by businesses having a turnover that exceeds £85,000.  This means that if your business has a turnover exceeding this limit, it should register to charge and pay VAT amounts on products and services they sell. There is also the option where businesses can register voluntarily even when they have not passed the limit. Businesses that register to charge VAT should remit the same to HMRC during the time they file VAT returns.

There are different ways businesses can pay VAT to HMRC. For example, businesses can pay using their phones or online through the Faster Payments platform. They can also pay by CHAPS using a form that they fill online. Besides these two payment options, businesses in the UK may pay their VAT through:

·         BACs

·         Direct debit

·         Debit or credit card

·         Standing orders

·         At building society or a bank.

Registering for VAT 

When you register for VAT, you are given a VAT registration certification. The certificate will confirm the VAT number, the date you are required to remit your VAT payment and returns. It also confirms the effective date of the VAT registration for your business. Usually, the effective date of VAT registration is the date when your business reached the threshold or limit, and in case of voluntary registration, it’s the date when you asked to register.

You can register online for VAT in UK. When you register online, you create an online VAT account, which may also be referred to as Government Gateway account. You may also use an agent to submit VAT returns and handled matters pertaining to your VAT with HMRC on your behalf.

Charging VAT

Since VAT is an indirect tax, businesses collect the levy on behalf of the national government. Therefore, businesses should add the tax on the amount they charge to customers for services and goods bought. Businesses need to ensure that they add the amount correctly at the point of sale.

 When creating invoice to reflect on VAT rate and amount, businesses need to ensure the following information is available:

  • An invoice number
  • The date of the invoice including the date in which the business supplied the goods and services in the event that it’s different to invoice date.
  • Business contact information including the name and address
  • The VAT registration number
  • Contact information of the customer including the name and address.
  • Description of the products and services that are being invoiced for.

On top of that, a business should ensure that it provides information for each item featuring on the invoice including:

  • VAT rate
  • Quantity of items sold
  • Unit price in exclusion of VAT
  • VAT amount being paid
  • Total amount the customer pays excluding VAT
  • And any cash discounts.

Businesses are required to submit VAT returns to the HMRC in every 3 months. The 3 months’ period is known as the accounting period of the business. The VAT returns record things such as the total sales and purchases, amount of VAT the business owe, and the amount of VAT a business can reclaim. The VAT returns also feature the VAT refund from HMRC.

What are VAT returns? When we talk of VAT returns, we simply mean the record of the sales and purchases that your business has made and these should be submitted in every three months.

VAT Calculator

When calculating the amount you are required to pay for VAT, you may want to use a VAT calculator. The calculator is helpful if you are confused over how to calculate the VAT and it eliminates the manual method of calculating the VAT amount.

Formula for Calculate VAT in UK

amount inclusive of VAT = Amount excluding VAT + VAT amount

Amount excluding VAT*(VAT rate/100)=VAT Amount

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