If you feel muddled by the different mortgage options on the market don’t despair as help is available. The best place to start is by looking at mortgage application criteria before singling out a mortgage to suit your circumstances and securing the best deal for your money.
Mortgages are based on your salary so it’s important you are in paid employment to start with. As a general rule of thumb mortgage lenders will let you borrow roughly around 3 to 5 times your salary so you could use this as a rough guide to the amount you can secure. You should bear in mind that this will vary depending on which mortgage provider you use so it really does pay to do your homework. If you are using the internet as a resource then a useful tool are the mortgage calculators which can be found on the websites of most banks and lenders.
There are other factors to be taken into consideration as well when calculating how much you can afford to borrow. For starters how many applicants are there? If you’re going solo and purchasing a property on your own this is straightforward. If you’re buying with a relative, partner or friend, each applicant’s circumstances will have to be accounted for.
When applying for a mortgage the salaries of all applicants are taken into regard and the total amount borrowed is based on the guaranteed gross annual income. You should remember that your gross annual income is classed as your main salary only and does not include any other regular income such as bonuses, commission or overtime. Mortgage lenders will generally ask for additional income to be detailed separately. The same applies to any benefits you may be in receipt of, such as the child tax benefits that exist within the United Kingdom.
Next you will need to think about your credit commitments. Do you have any outstanding balances on store cards, credit cards or loans? If so, full details of these are factored into your mortgage application so an accurate assessment can be carried out of exactly how much you can afford to pay back each month and therefore borrow overall.
Whether or not you have any dependents will also affect the amount you can borrow as the expense of having children has a bearing on your monthly repayment amount.
Other things that will effect your mortgage application are the deposit you have and the value of the property. If you don’t have any spare cash for a deposit then a 100% mortgage is an option to investigate, although these are becoming extremely rare. If you do have a deposit this will decrease the total amount you need to borrow. Finally, the amount of time you want to pay your mortgage back over is also pertinent.
Adam Singleton writes on a number of topics on behalf of a digital marketing agency and a variety of clients. As such, this article is to be considered a professional piece with business interests in mind.
