For many prospective home buyers, purchasing a home unprepared is a real wakeup call, providing them a frank and honest look at their budget that they didn’t have before. It’s crucial to examine your personal finances right away, long before the loan process starts. It’s better to know what you can and can’t afford ahead of time and shop accordingly, rather than be surprised by having a loan officer tell you that there’s no way you can qualify for a certain mortgage. To this end, a budget planner is an essential tool that allows home buyers to truly look at their monthly expenditures in order to decide right away whether it’s time to enter the housing market now, or wait until any outstanding financial issues are cleaned up.
The budget planner is a complex calculator that requires a lot more information than most online calculators, but this is necessary in order to get an accurate assessment of your funds coming in and funds coming out and the possible surplus that can be used for a home loan payment.
The budget planner is divided into six tabs that you will fill with information, and the seventh tab will list a summary of your data along with the surplus it has calculated. The tabs you will need to complete in the budget planner are:
- Income: Salary, bonuses, investment income, allowances and other income.
- Expenses: Rent, rates, utilities, phone and Internet expenses, groceries, education fees, home maintenance expenditures, and any other monthly expenses you may have.
- Insurance: car, health, life, home, business, etc.
- Loans: any outstanding debt, including personal loans, auto loans, current mortgage, credit cards, etc.
- Transport: funds spent of getting from point A to point B, including petrol, public transportation, parking and more
- Leisure: holidays, restaurants, entertainment, gifts, health club memberships, and things of this nature.
The result of all this information, if filled out completely and honestly, is a detailed account of what your family spends money on monthly and the surplus available for a home loan. The budget planner could be used in tandem with the buying power calculator to estimate exactly what that surplus will get you. If it turns out it’s not enough, the budget planner can be used to analyze monthly spending and see exactly where over spending is happening. Proper budget and smart spending can insure a better surplus and more buying power.
Online home loan calculators are an essential resource for anyone who is considering entering the housing market. They can be used to plan loans, compare the costs and features of different mortgages, determine fees like the stamp duty, work out the savings benefits of extra payments, examine options for saving toward a larger down payment, and even work out the household budget before doing any of this. Using an online home loan calculator should be every prospective home buyer’s first step in the home purchase process.
Important: This calculator is provided to be use as a guide only and should not be considered a quote, a loan offer, or investment advice. Other criteria may need to be considered, and before taking out a loan you should always consult with your personal financial adviser.