Mortgage affordability checks
What are mortgage affordability checks, how do they work and why are they important? Our guide explains it all.
Mortgage lenders are far more stringent about testing your mortgage affordability than they used to be. It is splashed across the news and if you have started looking for a mortgage, you would have seen the word ‘affordability’ countless times already. But what does this really mean for you?
We are going to take a look at how your mortgage affordability is calculated and how you can improve the results.
Mortgage affordability checks are exactly what they say on the tin. The lender is not only checking to see that you can make monthly mortgage repayments. But also how much you can afford to borrow.
How is this done?
Firstly, the lender wants to know how much your annual income is. Of course you will have to evidence the income with at least your last three payslips.
The lender then takes your income and looks at your outgoings. This includes your monthly bills and any debts and loans. No different really to your household budget.
Why is this done?
An affordability check is all about dissecting how a new mortgage would fit with your current commitments. It will prevent you from taking on a mortgage that will be difficult for you to pay back, and make sure that your potential new mortgage fits in with your current lifestyle and financial obligations. So, it is there to protect you too.
If I fail the check is that it?
There are lots of things you can do if you do not pass the lender’s affordability check. Reducing your debts and managing your money better, will help to improve the outcome and we can also answer any questions you may have.
What happens when the lender agrees I can afford a mortgage?
Now you know your budget, you can start looking for houses that match both yours and the lender’s requirements!
How do I get started?
As independent mortgage advisors, we can help you to get started. You can contact the team today for a completely free, no obligation consultation, to help you get firmly on the path to your new home.