How much can I borrow?
This page will help you understand how we and a lender work out how much you're likely to be able to borrow for your mortgage and how much you'll need as a deposit.
Your income and the size of your deposit (or equity, if you're remortgaging) both have a fundamental impact on the amount you can borrow and what interest rate you'll get.
Speak to us now and find out how we can help you.
Guide to buying a property.
This guide will talk you through each of the key areas of purchasing a property from getting started, finding a property and making an offer, to completion of your purchase and collecting the keys to help you understand the structure and buying process.
Lenders check how much you can afford.
In years gone by, lenders used a multiple to your income of up to five times to work out your maximum mortgage borrowing figure.
Now it's a lot more complicated as following the 2014 Mortgage Market Review the lender is now required to check your affordability of your new mortgage – in basic terms, this just means whether you can afford the monthly repayments.
This is not quite as simple as it sounds however, as under the mortgage rules, lenders must now obey strict guidelines to check whether a borrower can afford their mortgage repayments, not just at current interest rates, but also if interest rates were to rise to a figure as much as 6% or 7%.
Be prepared for your mortgage discussion
Mortgage 'discussions' have got longer as the rules regarding affordability have become more stringent meaning more information in needs from applicants.
Lenders have always asked about income and large bills such as utilities and debt, but the are now also interested about what you spend your money on during a normal month cycle.
Car running and maintenance costs
Entertainment and eating out
Weekly food shopping
Ground rent and service charges (leasehold title costs)
When judging your affordability of your new mortgage they want to be sure you can comfortably afford it even if interest rates rise.
They will look at what your spending habits have been in the three months before applying for a mortgage, what your average overtime, commission or bonus has been, so if you know you're about to apply, try to live sensibly, and well within your means for several months and make sure you do any overtime offered by your employer.
Put up as much as you can for the deposit, especially if it's your first mortgage, as borrowing less means less risk for the lender, and will increase the amount you can borrow. and your likely success of being accepted.
Can I get an accurate maximum loan figure?
If you multiple your gross income, solely or jointly, by 4.49 this will provide you with a rough estimate to how much mortgage lenders might offer you. This is a very rough estimate, based only on your income, so any significant outgoings, such as child maintenance, debt repayments or school fees, could reduce the amount a lender's prepared to offer you.
The figure should not be relied upon. You won't get a fully accurate figure, but if you speak to one of our specialist mortgage brokers, they will be able to give you an firm borrowing maximum figure based on your individual income and expenditure.
From there, we'll be able to advise you on the lowest cost mortgage product on the market available to suit your needs and gain an agreement in principle (AIP) from the lender that we would recommend to you. An AIP is a mini-application to the lender which carries out a credit check and criteria check to see if the lender would be willing to lend to you, subject to further internal checks, document assessment and valuation/survey. It'll also confirm the figure that we have advised to you as your maximum borrowing.
When you're approved for the AIP, the battle of gaining your new mortgage is half over. It means the lender's looked at you, credit checked you, and on the surface, you're someone that they would lend to. It's not binding on the lender, or on you however until your full mortgage application has been submitted and processed and you are issued your formal offer of mortgage.
Shall I take the maximum I can borrow?
If you're buying, you should find out how much you can borrow before you start house hunting, and be clear on how much you can afford to repay.
If you're remortgaging, it's good to know how much you need before finding out what a lender might be prepared to offer. It's easy to get tempted to up the loan size when the lender is willing, but don't exceed what you think is affordable.
We will work out and assess how much you can afford to repay. If it shows that you can't afford a property, we'll advise you.
Only look at properties within 5% of your budget and avoid those even a fraction over. If not, you'll either break your resolve or be disappointed.
I'm self-employed. Can I still get a mortgage?
If you're self-employed or would struggle to prove your long-term income – perhaps you've worked abroad or you are on a temporary contract – then getting a mortgage can be difficult. You'll need to show proof of your income, which isn't always easy.
Your income will be assessed on your net profits, not turnover. While this can work for those in established businesses, it could mean those who have recently started working for themselves may struggle to get a mortgage. In this case it is vital that you seek professional advice from us as we can calculate and present you to a lender in the best way to gain an agreement to lend to you, even if you only have 1 year accounting period.
You need a minimum of 5% deposit to get a mortgage and up to 40% for the lowest rates
Once you know how much you can borrow, you need to work out what you're able to provide as a deposit (or equity if you're remortgaging). The minimum you WILL NEED is 5%, but the bigger the deposit/equity the lower the interest rates will be and this can better your chances of being accepted by a lender. If you are on the borderline of affordability, having more to put down might help the lender to say yes.
I've only got a 5% deposit – what help is there?
If you're buying your first home (or in some cases, just moving), there are a range of schemes designed to help you get on the mortgage ladder with a low deposit.
Which one is right for you will depend on your individual situation and what you want to buy.
The list of options available includes:
Help to Buy – equity loan
Armed Forces Help to Buy
London Help to Buy
Help to Buy: Shared ownership
Rent to Own - Wales
We can advise you on whether you are eligible for each scheme and which criteria you must fit.
Our mortgage brokers work tirelessly to ensure you are happy every step of the way, we can help with finding a property, negotiating the price, arrange the mortgage and dealing with the solicitors.
Our mortgage advisors are available online 7 days a week to answer all your queries about taking out your first mortgage, from 9am to 10pm.
There really is no reason to use anyone else. Contact us and see how we can help you.