Can I Get Bad Credit Mortgages

Why Mortgage Affordability Matters

More and more mortgage lenders are now changing their criteria when considering how much they will allow you to borrow. Rather than basing it on multiple incomes, lenders are now actually looking at affordability.

This is great news for homebuyers, particularly First Time Buyers (FTB’s). According the Council of Mortgage Lenders, FTB’s now get offered an average borrowing of 3.24 times their income. For most, this is not normally enough to buy where they want to live.

However, this does not need to be the case. By looking at affordability rather than straightforward income multiples, lenders can see what a potential homebuyer can realistically afford. This is a real boon for potential borrowers, especially FTB’s trying to get that first foot on the property ladder.

Moneyfacts, the independent research company, revealed that five of the top 10 mortgage lenders now look at affordability (also known as ability to repay) in preference to income multiples.

The good news too is that even some of those lenders who still work on the income multiples basis have refined their criteria. This means that they may lend more where there are larger salaries or a bigger deposit involved.

If you are looking to mortgage or remortgage, the most important thing is to borrow how much you realistically think that you can afford. Just because a lender believes that you can afford x amount every month, if you feel that it would be over stretching yourself, then don’t go ahead with the mortgage.

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