One of the questions that our clients in Hull want to know from their Hull Mortgage Advisor is how much they can potentially borrow. This can depend on a number of factors.
The rule of thumb is that you can usually borrow around 4.5 times your annual income but becomes more complicated based on what types of income you have and also the level of credit commitments that will remain when the new mortgage completes.
All lenders will consider using basic earnings from employment and declared income for the self-employed in Hull, but there may be other income that can be used for an application. This is where things can become slightly more complex because not all lenders accept all income types, or if they do then they may not consider using 100% of the amounts.
Here are some of the other income types that some lenders (not all) will consider using when working out how much they are prepared to lend to you when assessing income
There can be a really big swing in how much some lenders are prepared to consider lending based on these income types. You would be surprised to see the difference in the lending capacity that you have from lender to lender.
Okay – now to add to the complexity of how much you are able to borrow, there are other things that are factored into the assessment. Here are some of the things that can reduce the monies that you are able to borrow.
Monthly Commitments – If you have personal loans, car finance, mail order, catalogues etc., then lenders will factor these into the assessment of how much they are prepared to lend. They will tend to look at your current monthly payment rather than the overall balance (Although some lenders will take into account overall indebtedness of customers). If you have a credit card or a store card then lenders will usually work off the overall balance and then work out a percentage of the balance to arrive at a monthly figure – so as an example it might be that on a credit card balance of £1,000 they assume a 3% monthly payment of this (£30 per month) to factor in this debt.
Family Commitments – Lenders will also factor in if you have any financial dependents. This could be children or even other relatives that might be dependent upon your income. To give an example – If you are a single applicant with no dependents then you might be able to borrow more than a single applicant that has 3 financial dependents. If a customer is making monthly maintenance payments for children that do not live with them then this figure will also be classed as a credit commitment. Other family costs such as nursery fee’s, childcare costs are also often considered as a monthly commitment and can affect the amount lenders are prepared to lend.
Other Commitments – There are other things that can often crop up on an application that can potentially be viewed as a monthly credit commitment, but the assessment of this can vary from lender to lender. These include pension deductions, payments to share schemes, deductions on wage slips such as student loans, cycle to work schemes, company cars etc.
So how much can you really borrow? – As I stated at the very beginning. It depends on your circumstances, and we know from speaking to clients every single day that everyone’s situation is different. I would take the calculators that are online with a pinch of salt because they are often just a multiple of the declared income that has been typed in and not always accurate. They often do not take into account other income types that you might have or monthly commitments.
The ‘I Am A Mortgage Broker’ Team are based in Hull and will go above and beyond to help all of our clients to ensure they get an excellent service.
We can accurately work out how much you can borrow and how much of a deposit you will need.
We will guide you through the whole process from the initial telephone call, right through to your mortgage offer and then finally moving into your new property.
We offer Free Mortgage Appointments to all of our customers in Hull.
If you would like to talk to a mortgage broker you can rely on in Hull, then contact us today by either calling, sending a message or book an appointment online through our website