Things aren’t always as bad as they seem
The Halifax have just announced a small drop in their house price index for June of 0.5% which on the face of it would suggest that the worst may not yet be over for property values despite promising rises in similar index’s over the past few months.
However there is a general feeling among the industry now that the bottom is out, and while prices are likely to remain fairly stable for at least the next year due to lack of mortgage products there is some good news out there for people looking to borrow.
Recent research from Unbiased.co.uk suggests that many people now believe that they can only get between 0.5 and 2.5 times their income when looking to mortgage and that only 24% of the UK believes they could arrange a mortgage for more than 4 times their main income.
The truth is that most lenders will accept four times main income as a guide or perhaps 3.5 times joint income however the difficulty is really for those with dependent children which has started to play a more significant role in lenders assessment of affordability and those people who have existing credit commitments which will continue to run after the mortgage completes.
If you are holding significant savings and have existing loans which have a short term to run it may be worth considering paying off loans before applying for a mortgage in order to assist your maximum loan and affordability calculation particularly if you also have children.
If you are unsure how much a mortgage lender will consider lending you many now have useful calculators which will give you an indicator of their maximum loan available on their websites.