What is the Maximum Mortgage I can apply for?

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What is the Maximum Mortgage I can apply for? Mortgage Guardian

What is the Maximum Mortgage I can apply for?

What is the Maximum Mortgage I can apply for? – Not everybody needs to push the finances to the limit when buying their dream home but a rising number of people do need to for a variety of different reasons. Rising house prices over the last several years have made it hard for many to get onto the housing ladder, whilst some people need to find a lender who will take all of their basic income and overtime or bonus into consideration.

What is the Maximum Mortgage I can apply for? Mortgage GuardianWhatever the situation, using the services of a mortgage broker is well worth it as they have the whole of the mortgage market to compare as well as the experience to help you get the right mortgage for your needs and objectives.

In a time not that long ago most mortgage lenders would take your salary and apply something called an income multiple and then minus commitments to determine how much to lend. Since the Mortgage Market Review there has been pressure to make lending more affordability based. If you think about it you are most probably going to have more disposable income at the end of the month if you have one child rather than four!

Another thing to consider is each lender have their own lending policy with some lenders being more cautious with the first time buyer or more generous towards couples or people on higher salaries.

So, how do mortgage lenders calculate how much to lend as a maximum?

Whilst income multiples are not totally dead, mortgage lenders are obligated to ensure that the mortgage is affordable. They also stress test your finances to ensure that monthly mortgage payment are affordable should interest rates rise. Affordability with lending caps or standard income multiples with affordability measures in place are often used. A lender may use an automated system to check affordability or an underwriter will look at your application manually which could be an advantage in certain situations when maximum borrowing is required. Your credit history and credit score could form part of the calculation as could type of income, debts and your spending habits.

Whichever way you look at it, calculating affordability can get very complex and your mortgage adviser or mortgage broker could guide you through the whole process.

Additionally, if you are looking to buy a property for investment then a buy to let mortgage is based on rental income and not based on the applicant’s affordability so much. Specialist lenders can stretch the affordability calculations to lend more as can providers of secured loans. If you are seeking additional funds on top of your mortgage some lenders will offer more or less based on what you want to borrow the money for. I am sure in the future we will be hearing a lot more from green mortgages as lenders will give better rates if you want to borrow money for home improvements that make your money more self-sufficient which can help with affordability.

The best way forward is to seek advice from one of our mortgage advisers who will tell you how much you can borrow and let you know monthly costs based on current interest rates and also how payments are affected should interest rates rise.

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