How much can I borrow?
One of the first things that any first-time buyer wants to know is how much they can borrow. Until you know the answer to this it can be difficult to search for properties because you aren’t sure what is within your budget. The way lenders decide how much they will lend has changed. In the past it was reasonable to say that a lender would offer you three or four times your income. This was a handy benchmark but it isn’t relevant in today’s lending climate.
Lenders now look at overall affordability by looking not only at your income but also at your outgoings, because only by focusing on the two things together can they get a reasonable idea of what you can afford to repay on a mortgage each month.
Not only do lenders check that you can afford to meet the initial repayments on a mortgage, along with your other financial commitments, they must also work out whether it would still be affordable if interest rates were to rise. This is called stress-testing your application.
Lenders often offer a basic calculator on their websites that will give you an idea of what you can borrow as a maximum based on your income and a few simple details. In order to get a better idea of what you would be offered we can get a Decision In Principle. This would then put you in a strong position moving forward.
What size deposit do I need?
There is no standard amount that you need to have saved up as a deposit. A basic principle to bear in mind though is the more deposit you have the cheaper your mortgage is and the more likely it is that a lender will lend. There are 5% deposit mortgages available and in cases where parent’s savings are held on account it is even possible to get a 100% mortgage.
Best/Cheapest 95% mortgage
A purchase price of £200,000 with a deposit of £10,000 results in a mortgage of £190,000. Borrowing this over a mortgage term of 35 years a 2-year fixed rate mortgage would come in at 2.89% and £720 per month. However, just because a mortgage seems to be the cheapest it doesn’t mean it will be the best for everyone and as criteria may not match or there could be associated fees that make other options more cost effective, also products are constantly changing so you need to review the options just before applying for the mortgage, why not give us a call for the most up to date information to suit your circumstances.
What is the mortgage process?
Step by step:
- Mortgage Style explain the process
- Fact find completed – we collect all of the relevant information to ascertain details like income, outgoings and eligibility criteria
- Recommendation made by us including maximum mortgage, cheapest option, costs including fees etc.
- Mortgage Style explain options and answer any questions about the process or products and options
- Application submitted to lender by us
- Lender Assesses application – carries out a survey, underwrites the case
- Mortgage Style liaise with all parties and chase things through
- Mortgage offered
- Mortgage Style liaise with all parties to get case completed as soon as possible for the client