The question that everybody wants to know the answer to – but with the new affordability rules that came in to play in April 2014, calculating your borrowing potential has become something of a dark art.
Welcome to the first of 12 blogs guiding you through everything you need to know about mortgages.
The focus of lending has now moved from the traditional multiple of a person’s income to what an individual can reasonably afford and this means lenders will analyse your spending patterns from the last 6 months (for a typical borrower) before determining a “safe and appropriate” commitment that you can make.
They must also include in this payment, an allowance which ensures you would still be able to afford the payments should interest rates increase.
Is the borrowing criteria the same for everyone?
Unfortunately not. If you fit into one of these categories you may need to provide 2-5 years of financial information before a decision can be made.
– Directors with 25% equity
– Sole Traders
– Directors of limited companies
So how can I maximise my borrowing capability?
The key to maximising your borrowing potential is preparation. With a lender requiring access to your previous 6 months finances, planning well ahead is key. Here are some quick tips for improving your borrowing capability.
– Clear any short term debts such as small loans and credit cards
– Cut down your regular spending – perhaps put big shopping trips and expensive holidays on hold temporarily
– Use the money you’re saving on cutting down your spending to increase you deposit (an increased % deposit can significantly increase your borrowing power)
– Make sure you are on the electoral role
– Avoid Job Changes
– Check your credit report using a service such as Experian, Equifax, or Call Credit and make sure there are no hidden surprises
Want to know exactly how much you could borrow?
No matter how challenging your circumstances, Credius’ expertise will help you maximise your borrowing potential and ensure you get the deal that’s right for you. Visit our website at www.credius.com or you can contact us directly by emailing firstname.lastname@example.org or call us today to arrange an appointment on 020 7562 5858.
Alternatively why not check out our Mortgage Income Multiplier and Mortgage Payment Calculators here – Please note these calculators should be used for guidance only.
Next time: Can I have more than 1 mortgage?