Should you deal through a broker!
Some people will never deal through a broker. This writer was such a person until I realised the level of work involved and the potential savings both in time and money available to home buyers.

The alternative is to go directly to the bank or banks yourself. But you need to consider is it better to deal with a lender or Insurance company directly when they only have their own products to offer you?

As regulated intermediaries we are obliged to look after your interest.
And our service is free.
Lenders pay intermediaries to give them business because it is good value for them to do so.

We meet you, we analyse your needs, we compare lender rates and borrowing limits and we prepare recommendations to get you the best deal. And we stick with you all along the way until you buy your home,
How will the new lending guidelines impact me?
The new guidelines when implemented will reduce the level of borrowing available and will also require savings in excess of 10% of the purchase price. The proposed deposit level is 20% which seems too high given our heavy tax burden and high rental prices.

It is inevitable that the new rules will have a negative impact on house prices. In some areas house prices will fall, in others of very strong demand they will possibly stagnate in the short term.

In the long run it will benefit buyers but in the short term it will be hard to see this.
How much can I borrow?

How much can you borrow depends on a number of factors.
New lending rules will limit borrowing in most cases to a maximum of 3.5 times gross income. This is not to say that you will qualify for this amount but rather that this will act as a cap.

Borrowing limits also take account of the following

  • Restrictions on the percentage of your net income that you can borrow
  • Ensuring that you have a certain minimum level of money to cover the cost of living
  • Proving that you can afford the proposed repayments by reference to current spending and savings habits

In practice it is difficult to arrange mortgage facilities for incomes less than 30k for a single person (50k for a couple).

The key criteria lenders are looking at are:

  • Your credit history
  • Your savings record
  • Clear evidence over a period of time showing that you can afford the proposed mortgage even if interest rates increase by 2%
  • Your income and occupation
  • The sector in which you are employed
  • Whether you have sufficient income after loan repayments 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 likelihood of your income continuing into the future. In this regard certain classes of employment are by their very nature more secure than others.

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
  • Contract income is by it's very nature subject to uncertainty. For contract employment lenders will look at the nature and length of the contract /contracts and the liklihood of income continuances .
  • 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.