Ok, if there’s one thing you don’t need us to tell you, is that mortgage lenders are far more stringent about testing your ability to afford a mortgage than they used to be.
It’s splashed across the news all the time and if you’ve been hunting for a mortgage you would have seen the word affordability countless times already.
Yet what does this really mean for you?
We’re going to take a look at how your mortgage affordability is calculated & how you can improve the results.
Affordability checks are exactly as it says on the tin.
The lender is checking for both you and them that you can afford to pay a monthly mortgage.
They’re also checking how much you can afford.
Firstly, the lender wants to know how much your annual income is. Of course you’ll have to evidence the income with at the very least payslips.
Then the lender will take this income and look at your outgoings. This includes your current debts and loans, monthly bills, family payments and other expenses.
No different really to your household budget
It’s all about dissecting how this new loan will fit into your current commitments – it can seem daunting and a little bit invasive, however although it’s the lender that requires this to take place, it can also be a benefit to you too.
The check will prevent you from taking on any mortgage that will ultimately be very difficult to pay back and will make sure your potential new mortgage fits in with your lifestyle and financial commitments. It’s there to protect you too.
Of course not, there’s lots you can do to improve your results and it doesn’t mean the end of your property ladder journey. Reducing debts and managing your money better will help improve the outcome. We’re always here to help with any advice or questions you may have.
Now you know your budget in a lot more detail you can start looking for houses that match your requirements and the lenders requirements!
As your local financial advisers, we’re here to help you get started. You can contact the team today for a completely free no obligation consultation, designed to get you firmly on the path to your new home.