Each lender has a completely different affordability calculator to the other. Years ago it was 2 to 5 times your annual income/net profit. Now it’s several factors that affect what you can borrow mainly:
- Credit score/history
- Income – salary, other income – bonuses/overtime. Secondary employment. Benefits, Net profit where self-employed. Salary & dividends where a 20% or more shareholder in a Ltd Company. Pension income. Where any legitimate money is paid to you on a regular basis a lender may take into account
- Age on application & end of mortgage term
- Committed outgoings – credit commitments like, credit cards, loans, hire purchase, maintenance payments.
- None committed outgoings – Childcare costs (this is rapidly becoming a cost that lenders are looking at as this is now a huge cost to applicants. Its secondary to a mortgage but in a lot of cases just as expensive as a mortgage)
- Amount of deposit
So, this is why a mortgage lender needs to know lots of details about you to get a good picture of you financially as they want to know if they are going to get their money back.
