How much can you borrow for your home?

December 30, 2016 by Brendan O'Neill

Lenders

According to the Council of Mortgage Lenders (CML), mortgages are now much more affordable than in the past. However, that doesn’t mean you will find it easier to obtain a mortgage. Many people seek advice from a CeMAP qualified mortgage adviser to help them find a suitable loan, as they have had difficulties in the past.

Eight years ago, homeowners spent 23.7% of their monthly income on mortgage repayments, while today that figure has reduced to around 17.7%. The CML stated that although the low interest rate deals on offer should make it easier to buy a home, that isn’t necessarily the case. The factors which can impact on whether you can obtain a mortgage, and how much you can borrow are affordability tests, credit scores, income and expenditure.

Buyers can help increase their chances by saving as large a deposit as possible, so that they have access to mortgage deals with a lower rate of interest. As you are borrowing less, the monthly payments will also be lower.

All lenders will offer a loan which is a multiple of your income, and they all vary. Some lenders will loan three times your annual salary, while others may lend as much as five. Lending criteria also varies among lenders, with affordability checks taking place with them all.

Taking steps to improve your credit score and income levels prior to arranging a mortgage application will also help to improve your chance of being given a mortgage.