Affording a mortgage

You can usually borrow 4.5 to 5 times your salary. Some lenders have recently changed their criteria and now offer up to 6 or even 7 times your salary however, strict guidelines are in place about who could qualify to borrow at higher income multiples (now called LTI – that’s Loan to Income).

It’s usually limited to professionals or people who work in a certain sectors such as Pilots, Accountants, Teachers, Barristers, Dentists, Doctors, Engineers, Pharmacists, Opticians, Vets amongst others, give us a call and we’ll check if you qualify, we’ve got access to 20,000+ products and over 90 lenders that include high street banks, building societies and a plethora of specialist lenders

Here are some additional factors that will influence the amount you can borrow:

• Source of income and salary
• Deposit size
• Age
• Mortgage length
• Income in retirement if you’re mortgage runs into retirement
• Government home owning schemes
• Dependents (Children or family members you look after)
• Credit commitments (Cars on finance, personal loans, credit cards, maintenance payments, other mortgages)
• Extra benefits offered by banks to premium account holders, etc.

If you are looking to get approval for a mortgage to buy your new home or if you looking to remortgage to a better deal or even if you are thinking of getting a buy to let, your first step is to use a mortgage calculator to determine your affordability i.e. how much you can borrow. Mortgage calculators assess affordability based on key factors including the below:

• Mortgage term i.e. the length of the mortgage which could be anything up to 40 years
• Initial term i.e. 2 years, 5 years or longer
• Salary and any additional income
• Mortgage type
• Current product rate and stress rate etc.

As part of the application, the lender will likely run a background credit check and review your credit score in order to build a picture of how you manage your credit commitments. Sometimes we miss payments because we might forget or other times it might be due to circumstances beyond our control.

A lender might decline an application because of a low credit score or it may be that the credit file doesn’t match or meet the lenders criteria.

However, all the advisors at Morfinity have access to a range of lenders some of which specialise in providing finance to applicants with a less than perfect credit profile and in some cases, they will disregard late unsecured arrears such as late utility bills or mobile telephone payments, so it’s important to provide all the most recent information to your advisor and we can ensure we put forward your application to the best suited lender.

If I have a small deposit mortgages are now available, with a number of banks, building societies and specialist lenders offering low deposit mortgages starting from just 5% of the property value.

There are other circumstances where you may not need to pay a deposit and the lender can finance the whole purchase amount, this includes concessionary purchases where the vendor (seller) may be a relative or a landlord and has agreed to sell the property to you at a discount. We have a number of lenders who provide this type of finance so please call us to find out more.