FIRST TIME BUYERS
One of the most important decisions you will ever make is when you are buying a house which can be an extremely daunting experience and when you are then presented with all of the different mortgages from quite a different number of sources, it’s no wonder that your stress levels can rocket.
Lenders used to just multiply your income by up to five times to work out your maximum mortgage size. Now it’s a lot more complicated as the lender has to check the affordability of the mortgage – but in basic terms, this just means whether or not you can afford the repayments.
New mortgage rules.
But, again, it’s still not quite that simple. Under new mortgage rules, which came into effect in April 2014, lenders must now obey strict guidelines to check whether a borrower can afford their mortgage repayments, not just at current interest, but also if interest rates shot up to 6-7%.
And, mortgage ‘interviews’ have got harder. They’ve always asked about income and big bills such as utilities and debt, but we’ve heard stories since the changes of gruelling three-hour interrogations where people are asked how often they eat steak.
This is an extreme example, but do factor in committed spending such as gym membership, insurances, car costs, entertainment and eating out, the weekly shop as well as childcare and school fees.
Don’t be put off.
Ignore the scaremongering. It’s not ‘they’ll tell you to stop eating steak’. They’re judging affordability, so if eating out costs push you over the edge it can be a problem. If you can comfortably afford it, it’s not.
Even so, it’s best to make it as easy for your lender as you can. Most look at your spending in the three months before you apply for a mortgage, so if you know you’re about to apply, try to live sensibly, and well within your means. Put up as much as you can for the deposit if it’s your first mortgage, as borrowing less means less risk for the lender, and hopefully less close scrutiny for your finances.
Call us today on 020 3002 0933 to find out more.
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