Can't find the answer here? Check out our general FAQ.
- How much can I borrow?
- Will you take all of my salary into account?
- What factors affect how much I can borrow?
- Can I compare lenders?
- Can I view a lenders' past performance?
How much can I borrow?
How much can you borrow depends on a number of factors.
All lenders differ in their assessment of borrowing capacity.At the end of the day it is you who is borrwoing the money so the most important factor to consider is wheteher you believe you can afford the repayments or not.If you have any doubt don't borrow or borrow less.
The key criteria lenders are looking at are:
- Your credit history
- Your savings record
- Your income and occupation
- The sector in which you are employed
- Whether you have sufficient income after loan repaymenst to live a normal life
Will you take all of my salary into account?
In assessing a mortgage application the key consideration lenders look at is ability to service loan repayments.
In order to assess this, lenders review your current income and make estimations as to the likelyhood of your income continuing into the future. In this regard certain classes of employment are by their very nature more secure than others.
The 2009 recession has seen a significant decrease in bonus payments and many employeees sinply won't achieve anything like the bonus payments they achieved in the past.Lenders will probablyu only take account of around 25% of your typical annual bonus when considering sustainable income.
In considering income the following points are relevant:
- Some overtime will be taken into account –depending on the pattern of overtime over time
- An element of bonus, to the extent it is guaranteed, will be taken into account .
- Consideration will be given to length of employment and security of employment .
- For commission based income – Lenders not to happy taking over 20% of commission in to account.
- For contract employment lenders will look at the nature and length of the contract /contracts and the likihood of income continuance
- Other income to the extent it is verifiable and continuous will be taken into account.
Please review the lenders products or contact one of our consultants.
What factors affect how much I can borrow?
Perhaps the most important factor is your ability to repay the loan. For obvious reasons lenders ensure that your repayments will not overstrech you financially. The repayments as a proportion of your net income is used as a factor to determine a suitable level of borrowing.One factor affecting the size of your repayments is the period of time you have opted to pay the loan back over (The mortgage term). Some lenders will allow a maximum 40 years for the repayment of the loan. Spreading the loan over a longer period will reduce the payments but the total interest you pay over the life of the mortage may be higher. Use our Mortgage repayments caclulator to compare the cost over different terms.
The next factor is the amount you want to borrow as a proportion of the value of the property, know as Loan to Value ratio (LTV). Because a mortgage is a loan secured against a property a lender will want to make sure that the amount they are lending could be recovered from selling the property if the worst happened.
Use our simple calculator to give you a guide to how much you can borrow,