Gone are the days when a lender used to simply calculate the
mortgage loan available by multiplying your income by 4 or 5 times. Today it's so much more intense! For example, a lender will require to know
your monthly budget spend figures, right down to every direct debit on your
bank statements, including council tax, insurances, mobile phones, lottery
payments and gym membership! From these
monthly outgoings, the lender will look at affordability and decide from there
what mortgage amount might be available to you.
However, on the other side, not only can it be restrictive depending on
your monthly outgoings, but it can also be very generous depending on what
little outgoings you have! The lender
has a duty to make sure you can afford your mortgage today, as well as once
rates rise and specifically being affordable over a 5 year period.
As loans become more and more competitive, this has seen
some lenders lending well in excess of an equivalent 5 x income and some even
up to 7 times! For the right loan to
value, right affordability and right customer, lenders are willing to offer a
little bit more. And with rates so low,
now's a good time to be exploring these options.
What I do believe is that 2017 will be a very competitive
year. There's been a lot of talk about
rates increasing, but so far this year, they've actually only decreased. With a further twenty or more applications in
with the regulator for lending licences, this can only mean greater competition
and good news for the end consumer. Don't panic just yet!
However, a lot of people put changing their mortgage to the
bottom of the pile or the 'to do tomorrow' list. Of course, this keeps getting delayed behind
the 'save £20 a month on broadband' or 'update the pet insurance' chores. Yet the mortgage is the biggest debt you'll
ever have and probably one of the easiest to save on. So don't put it to the bottom of the
pile. Rates may be low now, but there's
no guarantee they will stay that way.
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