Variation between mortgage affordability calculators revealed

May 26, 2016 by Brendan O'Neill

Lenders

An investigation carried out by This is Money revealed that the maximum loan amounts given by the mortgage affordability calculators of various lenders, can vary by as much as £200,000.

Trinity Financial, a mortgage broker, assisted with the study, entering the details of a fictitious couple buying their first home into the calculators of 11 main high street lenders. The results were based on the couple having a joint income of £75,000 and a deposit of £25,000. The maximum loan amount was £200,000 greater than the least amount available. This variation in loan amounts could make a difference to the type and size of property which a first time buyer can afford.

The most generous lender was the Yorkshire Building Society, which would lend up to £411,750 based on the details of the fictitious couple, while HSBC offered the lowest amount at £225,000. Although some experts may argue that a lower figure is the more sensible option, the difference between amounts can have a huge impact on the property the couple can buy.

Mortgage affordability calculators are promoted by lenders as a guide to how much a borrower can have based on their income and the deposit. However, the lender will also conduct affordability checks which can also have an impact on the amount borrowed.

First time buyers can arrange to consult with a mortgage adviser who has been CeMAP trained, as they will have the lending criteria for many of the lenders. They will also have the details of smaller lenders who may be willing to lend different amounts.