Buying your first home has been out of reach for many people over the last 5-7 years. Now the dream has become a possibility if not quite a reality for many people, especially over the last 12-18 months.
Easier but not less complicated.
There is a considerable amount of information gathering at the beginning of the mortgage approval process. However, we have found that by helping you gather it all together at the start of proceedings, and to understand why it is needed, actually makes the whole experience smoother and somewhat less stressful.
5 Major Factors you need to consider and know before applying for a mortgage.
3: How much can I borrow? Income multiples are gone. Well not really gone, just not the main focus in the wonderful world of the Mortgage Advice Regulations. As from the end of April 2014, the lender is responsible for ensuring you can afford the mortgage for at least the next 5 years. So the new mantra is Affordability, Affordability, and Affordability.
Previously if you told a lender you could afford the mortgage and later on it proved you couldn’t, it was deemed your fault. Now, potentially it is their fault, especially if they have not demonstrated that they are “Lending Responsibly”.
This philosophy has been introduced as the part of the “Mortgage Market Review” (MMR) that took place post “credit crunch” and it made several recommendations on how to improve and move the advice process forward so that in theory, the same mistakes won’t be allowed to happen again.
Thanks to our Network “Personal Touch Financial Services,” we have incorporated all of the MMR regulatory requirements into our advice process. We achieved this well in advance of the April 2014 regulation start date. By being so ahead of the regulatory changes it has enabled us to educate our clients about this new era of responsible lending, whilst maintaining our long established high service standards and therefore very happy and successful client outcomes.
Every lender now has an affordability calculator that needs to be completed before an application can be submitted. This calculation requires your Pre Tax Annual Income, your Net Monthly Income (Take home pay) and the details of your Monthly Expenditure. This will then give you your Acceptable Maximum Affordable monthly mortgage repayments.
As we have a vast understanding of the various ways in which a lender equates what is affordable and what they will use as acceptable income, coupled with our deep knowledge of lending criteria across a comprehensive range of the market, we are well placed to get you through arguably one of the most stressful aspects of the application process.
Income comes in many acceptable forms
Wages, some state benefits, pensions and court ordered maintenance from an ex-spouse, are all examples of payments which give you a regular monthly income.
Self-employed income (including dividends) can be used but usually based on the pre-tax income taken from the business, which will need to be at least 1 year old, preferably 3yrs (with the majority of lenders requiring 2 years.)
Each lender does vary on what they will consider and include when making an expenditure assessment. Deposit size can have an impact on how many months’ bank statements will be required, but essentiality all aspects of living costs to be found in your bank statements will be taken into account. This includes debts and regular monthly commitments, e.g. child care costs, online gambling accounts and pre-tax deductions.
By taking your last 3 months’ bank statements, and discussing with you your monthly budget requirements and expenditure, we can establish a strong picture of what a lender may be prepared to offer you and allow you to go shopping for that first dream home, knowing what you can realistically achieve.
So as you can see, there is quite a considerably bit of information gathering and various aspects to considers before you even decide on what product you are going to need let alone what lender to apply to and all before you even start the mortgage approval process.
Rest assured that you are in safe hands with an experienced, reliable firm who have your best interest at the very heart of everything we do. We will hold your hand through the whole process and make the experience almost bearable.
If you would like the burden halved and be allowed to focus on the exciting elements of buying a home then get in touch with me to have a chat and see what can be achieved.
Daniel Hulme CeMAP
07743 357 419
This information is given as a guide. Lenders affordability calculations require proof of income and criteria can vary. All aspects of an individual’s circumstances will be considered before making a recommendation.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE
We normally charge a fee for mortgage advice, however this will be dependent on your circumstances. Our typical fee is £350 payable upon receipt of offer of mortgage.
J&M Green Mortgage Services Ltd is an appointed representative of Personal Touch Financial Services Ltd which is authorised and regulated by the Financial Conduct Authority