Calculators > Mortgage repayment calculator with credit score

Mortgage repayment calculator with credit score

Wondering how much your mortgage repayments might be? Use your mortgage calculator to quickly calculate how much you can expect to pay each month, what your mortgage rate you might be offered based on your credit score, as well as how much you could save if you improve your credit rating.

How your mortgage repayments were calculated

There are five main components that went into your mortgage repayment calculation:

1. The loan principal. This is how much you need to borrow to purchase a property. In your case the loan principal will be £0. A higher loan principal means higher monthly payments.
2. The loan-to-value ratio (LTV). This is the value of your loan principal divided by the deposit you put down. A higher loan-to-value is riskier for the lender, and will mean a higher interest rate. In your case, the LTV is 0%.
3. The repayment term. This is the length of time over which the mortgage is repaid, measured in years. In your case it’s 0 years. A longer term means a lower monthly payment, although it also means you’ll pay more in total interest over the life of the mortgage.
4. The average mortgage rate: this varies based on the Bank of England base rate, as well as each lender’s own policies. Right now the average mortgage rate in the UK for the largest six mortgage lenders is 5.04%.
5. Your credit score. An excellent credit score means that you are perceived as low-risk and you qualify for the best deals and the lowest mortgage rate. If your credit score is below that, the lender will usually increase your rate as compensation for the extra risk. In your case, your credit score band is and you could see a mortgage rate of 0%.

How to use this mortgage calculator?

Our calculator is really easy to use:

• Pop in some details about the mortgage you’re preparing for. If you don’t have a property in mind yet, just write whatever you think you could afford. You can always change it later.
• Get your credit score from one of the credit reference agencies or from a credit monitoring service. If you already know your credit score with multiple agencies, just enter the most recently updated one. If you don’t know your latest credit score, it’s okay to enter what you think it could be.
• Our mortgage repayments calculator will calculate your monthly repayments, and will also let you know what you could save if you took some steps to improve your credit score.

How does my credit score influence my mortgage repayments?

Your credit score is one of the most important factors that mortgage lenders in the UK look at when deciding whether to approve your mortgage application.

If you have a higher credit score, you will be seen as lower-risk and therefore get lower interest rates. At the other end, if you have a lower credit score, you’ll be considered higher-risk, and may be offered higher interest rates to compensate the lender for that extra risk.

The difference in interest rates between a borrower with an excellent credit score and one with a poor credit score can be huge. For example, a borrower with an “Excellent” credit score may qualify for a mortgage interest rate of 5% (one of the lowest on the market), while a borrower with a score in the “Fair” band may be offered a rate of 7% or higher.

Over the life of a 25-year mortgage, this difference in interest rates can translate to tens of thousands of pounds in additional interest paid by the borrower with the lower credit score.

If your credit score is not as high as you’d like it to be, there are several steps you can take to improve it before applying for a mortgage:

• Register to vote at your current address, and update your registration every time you move: being on the electoral roll can help lenders verify your identity and address, which can help your credit score.
• Check your credit report from each of the three major credit reference agencies (Experian, Equifax, and TransUnion) and spot any errors or inaccuracies that may be dragging down your score. Dispute these errors with the agencies to have them corrected.
• Try to keep your credit card balances well below your credit limits. Experian recommends keeping your balances below 25% of your available credit.
• Hold off new credit applications for a while. Each time you apply for new credit, it results in a hard inquiry on your credit report, which can temporarily lower your score. Avoid applying for multiple credit cards or loans in the months leading up to your mortgage application.
• Improve your credit history by paying bills on time. Payment history is the single most important factor in your credit score. Make sure to pay all your bills, including credit card payments, loans, and utilities, on time every month. One of the best ways to do this is with a specialised credit-building app like Wollit.

Wollit is an app available both on Android and iOS, and it works by reporting a fixed-fee monthly subscription as a loan repayment to all three credit reference agencies. This helps you build your credit history and directly influences your credit score.

On top of this, Wollit can also report your monthly rent payment to Experian. This can add another line in your credit report that shows lenders that you’re reliable and pay your bills on time, helping you make the most of your rent while you prepare to become a homeowner.