In this blog our Mortgage & Protection Specialist, Steve Chadwick, explains some of the benefits of using a mortgage broker.
Following the changes to affordability criteria that lenders have imposed over the last couple of years, we now have to take into account more and more detail when confirming how much a potential applicant could hope to borrow (the days of 3.25 x income are a distant memory).
Whilst it is likely that many first-time buyers will be carrying some debt (typically a car loan or some other credit such as a student loan) the following example shows the potential differences between high street lenders in respect of affordability and how using a broker can cut out the need to make several appointments. Further, a broker will also have access to other lenders who may not be locally known or present.
In the above example, the clients had already found a home they wished to purchase on the market for £180,000. Had they only visited lender 1, 2 or 3, they would have been told that they cannot afford the house they had picked out. A broker, on the other hand, would have pointed them towards lender 4, who would be willing to lend sufficient funds to purchase their dream home.
These days it is imperative that at any initial meeting we are able to see 3 months’ bank statements, corresponding payslips and P60s so that an accurate assessment of affordability can be made.
Some lenders will just look at the gross income figure and factor in any credit commitments (including student loans that are being repaid) before confirming the level of borrowing, whilst others will take a more forensic approach – looking at payslip deductions for pensions, the cost of essential travel, council tax and buildings cover. Bank statements may also reveal things like online gambling accounts, which can be a barrier to borrowing.
Of course, irrespective of what any bank or building society has to say, you may have your own thoughts as to what is affordable and what you are comfortable paying. Completing a budget planner prior to any meeting is a very worthwhile exercise.
Speak to your broker and they will be able to guide you through the process and confirm the figures in respect of mortgage size and typical monthly costs, allowing you to spend more time looking for the ideal property, and not trawling up and down the high street looking for the ideal lender.
If you know a first-time buyer who requires advice on a suitable mortgage lender for them, get in touch.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.
EXAMPLE FIGURES CORRECT AT TIME OF PUBLICATION.