Can I get a mortgage - Not sure I have enough income
Getting a mortgage is not just about how much money you earn. It's as much about what you spend that income on as it is about income! Affordability in the eyes of the lender is a dance between income and expenditure. The banks want to see a lot of the former and not much of the latter.
In this video, I take you through the types of income that the lenders are prepared to take into account and the types of expenditure that will lower the amount that you are going to get from the bank.
I always explain to clients that there is almost a minimum amount that you need to be earning and anything above that will have a dramatic effect on the amount that the lenders will be prepared to part with. The lender's algorithm will mean that borrowers' initial income will go towards subsistence and the more that they earn above this level will have a dramatic effect. It means that the difference in borrower power of someone who earns £25,000 is dramatically different from that of someone who earns £40,000.
You are looking at around 4.5 times income as long as you are not up to your eyes in debt. We always do an initial income calculator check just to get an initial sense check on what you are likely to get. Halifax is as good as any - AFFORDABILITY CALCULATOR
It is one of the reasons that we ask our clients to give us their credit report so that we can get an accurate reflection of what debt there is outstanding. It is the first transparency test for the client!