For many years, the simple answer to the question ‘how much can I borrow’ was ‘a multiple of your income as shown on your P60 or payslip’. Some mortgage calculators, high street lenders and price comparison websites still quote a basic formula like this, even when giving guidance on the amount that a self-employed professional or entrepreneur might reasonably expect to borrow.

Frankly, for most people looking for a mortgage nowadays – especially those with multiple sources of income – the answer is more complex than that. You might be able to borrow more than you expected to, but, following the tightening of lending criteria last April as part of the Mortgage Market Review, you may well find that your own bank does not want to take the time or trouble to understand exactly how you receive the income that you will use to pay off your mortgage. And that’s where the advice of a specialist, independent mortgage broker can prove invaluable.

There are a number of basic factors that influence how much you can borrow, including:

  • The deposit you can afford (lenders apply maximum loan amounts when your deposit is a relatively small percentage of the value of the property)
  • Your total income (salary, commission, bonus, dividends, rent, etc.) – including the income of anyone with whom you are buying
  • Your financial outgoings – particularly regular outgoings which affect your ability to repay the mortgage on a monthly basis
  • Your credit history – how reliable are you at repaying your debts?
  • The type of mortgage you require – residential or buy to let, repayment or interest only
  • Whether you are employed, self-employed, a significant shareholder in your business, a UK resident or a foreign investor – i.e. the way you earn your income.

This last factor is often the one that requires a bespoke solution, not generally found on the high street.

In essence, the lender will try to assess the affordability of the loan that you require and the likelihood of your paying it back on time and in full. Like many transactions, such an assessment is usually subjective and is therefore open to negotiation. Specialist mortgage brokers are used to representing their clients, dealing with many different lenders and presenting the most compelling case to the selected lender’s underwriters, who then issue an offer of loan amount and mortgage rate based on their ‘risk appetite’ – i.e. how badly they want your sort of business on their books.

Regularly we help people whose own high street banks fail to understand their income sources; we can match their requirements to a lender more likely to meet them. In this case, one of our experienced brokers helped the client present his income, outgoings, assets and liabilities to a lender in such a way that it could make a decision based on his entire financial position. And that decision made the difference between buying the home of his dreams and losing out to someone else.

Read about how a businessman with complex income got the home of his
dreams here or visit our Self-Employed Mortgage page for more information.

Private Finance

  • Established in 1999 Private Finance has successfully negotiated billions of pounds of mortgages. It is an independent mortgage broker whose mission is to exceed your expectations, working on your behalf to procure competitive terms and a suitable solution, quickly and efficiently.
  • Private Finance is not limited in the range of mortgages it will consider for clients. It is well respected by mainstream institutions and private banks, with which it has a reputation for introducing high quality clients. Its mortgage brokers are qualified professionals who understand and empathise with the needs of discerning individuals.
  • You can be assured that your mortgage will be competitively priced and well suited to your needs.
  • As a client of Private Finance your mortgage arrangements will be handled on a day to day basis by your dedicated broker. You will not have to deal with call centres or spend time providing personal information via online forms.
  • You are therefore free to get on with your life in the knowledge that your mortgage application is being managed proactively in order to meet important deadlines.
  • Our brokers take pride in helping clients fulfil their property aspirations and can often turn the seemingly impossible into reality! You may be able to look at a wider range of property than you previously expected and overcome obstacles which might have stood in the way of progress.

Email info@privatefinance.co.uk or call 0800 980 8777.

 

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