A mortgage calculator is basically an online calculator that works in much the same way as an ordinary calculator. The difference is that it will specifically allow a person to calculate the actual costs of his/her mortgage. These calculators are available all over the Internet - some are situated on lender sites and only work with their own products and some are to be found on financial 'portals' or on broker sites and will have a broader range.

A mortgage calculator is useful in calculating monthly mortgage repayment at a given interest rate or for a specific mortgage product. It also compares repayment costs on different types of mortgage. It calculates time and money a person could save by overpaying on mortgage. A mortgage calculator is helpful in finding out the additional costs of products/services that are mortgage related such as stamp duty, repayment protection insurance, buildings and contents insurance, convincing estimates.

A mortgage calculator helps homebuyers to decide about their monthly payment using principal, interest rate, loan term, loan cost, property information and insurance costs. Principal is the amount of money borrowed; loan costs consist of payment for closing, evaluation, loan instigation fee and other settlement costs. Mostly the mortgage calculators take into account two sets of information, loan information and property information.

The different types of mortgages for which a mortgage calculator can be used are balloon mortgage, adjustable rate mortgages, jumbo mortgages, sub-prime Mortgage and assumable mortgage. But most commonly used type is Adjustable Rate Mortgage (ARM) Calculator, which offers attractive interest rates but the payment is not fixed. It is also helpful in determining adjustable mortgage payments and a fully amortizing ARM. The monthly payment is calculated to payoff the entire mortgage balance at the end of the term. The term is typically 30 years. After completion of fixed interest rate period, the interest rate and payment adjusts at the frequency destined.

ARM loans have four major types of payment options such as minimum payment, interest-only payment, fully amortizing 30-year payment and fully amortizing 15-year payment.

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