Mortgage affordability myths busted.
2017 has got off to a great start. Lenders are fighting to lend with super low interest rates, our business is going strong and enquiries from first time buyers and home movers continue to grow. Of course, some of this is down to you…. so we’d like to say a quick thank you for all the recommendations!
In this blog we thought we’d bust some of the mortgage affordability myths that have been created by the media….
Clients frequently worry about applying for a mortgage and their spending habits. On most occasions, there isn’t a need to worry. The media have created this myth that the amount spent on holidays, socialising, and eating out will affect how much you can borrow. This broadly isn’t true!
Most lenders work off of the Office of National Statistics figures including Nationwide, Natwest, Royal Bank of Scotland, Halifax, TSB, Lloyds and many more. You may be surprised to know there is even a lender that doesn’t even ask what your child care costs are…..
Lenders do however consider credit card balances, personal loan commitments, car finance and HP agreements.
Lenders appetite to lend is strong which gives off the impression that they have a lot of confidence in the mortgage market, property prices and the future. Nowadays we have lots of lenders offering 95% mortgages, up to 5 x income and interest rates for 5 year fixed rates under 2%.
You may also be surprised to know that there are lenders that accept the following types of income:
1. Child Benefit
2. Rent from Lodgers
3. Second jobs
4. Commission and bonus income
6. Pay rises
If you have your own business or are self-employed there are a variety of ways lenders consider at your income. Each method benefits clients in different ways. The most common method chosen by lenders accessing the income of a Limited company owner is to work from the director’s salary and dividend income based on a 2 year average. If I use my own circumstance as an example it is best to have a lender that will use my director salary and the net profit (NOT dividend income) from the latest years accounts (NOT the average of the last 2). The lending difference is well over £100,000 and I can still secure a 5 year fixed below 2%.
We are frequently complimented on our knowledge in securing mortgages for the self-employed and limited company owners.
If you are considering a move or looking to raise monies for an extension, buy to let investment or any other reason and want us to check out what is possible for you please call on 01273 736536 or email firstname.lastname@example.org