Published On: Sun, Jun 16th, 2019

Mortgage affordability: The ‘single biggest factor affecting how much you borrow’ revealed | Personal Finance | Finance


A mortgage is a loan which a person may use in order to purchase a property or piece of land. It is usually taken out with a bank or a building society. There are two main types, with these being a repayment mortgage and an interest only mortgage. When applying for a mortgage, some people may use a calculator in order to work out what they can afford to borrow, and what size deposit they would need.

Sharing some insight into the world of mortgage affordability, a mortgage expert has broken down some top tips on the topic, exclusively for Express.co.uk.

Rosita Janulion, Mortgage Expert at Habito, explained: “The single biggest factor affecting how much you can borrow is your income.

“By ‘income’, lender’s don’t just mean your salary, they mean every type of income you get over the year, added together: your salary, bonuses, overtime, investments, company net profit, rental income from other properties, everything.

“If that changes year on year, a rough average from over the last two years is OK, if you just want a rough check of how much you can borrow.

“When it comes to your application though, it’s worth knowing that different lenders will use a different proportion of these income types and will ask for proof such as payslips, tax returns, business accounts.”

The expert explained that a mortgage broker may be able to share some expertise into what incomes a lender may consider.

“A broker will be able to advise you on which incomes will be accepted,” Ms Janulion said.

“Another important thing to remember is that lenders usually will not lend more than 4-4.5x someone’s income.

“So, if you earn £25,000, the maximum you could borrow for your mortgage would be £112,500, or if you were buying with someone else with the same income, £225,000.

“This can be tricky because house prices in some parts of the UK are much higher than 4-4.5x a lot of people’s salary – for example in London.”

Ms Janulion pointed out that some types of mortgage specifically for those in a particular profession are being offered. These are known as Professionals Mortgages.

“However, this is only to applicants with a specific profession, such as accountant, vet or lawyer,” she said.

“It’s worth checking if your career is included, as getting a loan from one of these lenders could make a big difference to what kind of home you could buy.

“Another thing to keep in mind is that, on top of your income, you usually need a minimum deposit of 5 per cent of the property value.

“After that, a bigger deposit won’t affect the amount you can borrow, though it can get you cheaper interest rates.”

The mortgage expert also pointed out that a borrower shouldn’t just focus on the amount that they can borrow.

“Remember that what mortgage you can afford isn’t just about how much lenders will lend you,” she said.

“Think about the other expenses of running a home, and any big plans that could affect your ability to repay your mortgage (like having kids or a wedding).

“These are things your bank or mortgage broker will ask you, to make sure the level you are borrowing at is deemed responsible.”

Another top tip which Ms Janulion shared was making use of a mortgage calculator, or seeking the expertise of an adviser or broker who specialises in the sector.

She said: “Finally, the best place to get a rough idea of how much you can borrow is by going online and checking a mortgage calculator. But, a word of warning – these are simplistic and only look at your income.

“For a more detailed idea of what you can borrow, you should speak to a mortgage broker or bank adviser who’ll look at your current account statements, take into account any debts you’re paying and your future plans, to get a much more accurate assessment of how much you could borrow.

“Many brokers are now online and free and can give a more detailed lending figure without doing a hard credit check.”

READ MORE: Teacher reveals she was refused mortgage on first home due to a parking ticket



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