Things aren’t always as bad as they seem
Author: Andy Bedford » Publish Date: 13 July 2009
Halifax has just announced a drop in their house price index for June of 0.5%. This suggests that the worst may not yet be over for property values, despite promising rises in similar indexes over the past few months.
But there is a general feeling among the industry now; that the bottom is out, and while prices are likely to remain relatively stable for at least the next year due to a lack of mortgage products, there is some good news for people looking to borrow.
Recent research from Unbiased.co.uk suggests that many people now believe they can only borrow between 0.5 and 2.5 times their income when arranging a mortgage.
And only 24% of the UK population believed they could get a mortgage for more than four times their income.
The truth is that most lenders would accept four or more times the primary income as a guide, or perhaps 3.5 times joint income. 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 have significant savings and existing loans, which have a short term to run, it may be worth considering paying off loans before applying for a mortgage. To assist your maximum loan and affordability calculation, particularly if you have children.
If you are unsure how much a mortgage lender will consider lending you, many now have calculators, which indicate the maximum loan, available on their websites, but the results of these are often questionably simplistic.
So if you want to know how much you can borrow, call a mortgage broker.