30 ADVICE Can I afford a mortgage? If you are buying your first home, or you have not applied for a mortgage in a while, you could be in for a shock. Mortgage lenders now want to know where all of you money goes. This is due to new mortgage afforability rules that came into effect in April 2014. Martin Newell, Blestium Financial The cost of any existing debts can play a big part in a mortgage affordability assessment. Lenders will ask you about outstanding balances on the following: • Any other mortgages or secured lending • Personal loans and hire purchase agreements • Credit card balances Some mortgage lenders will also ask about lifestyle expenditiure. This would include gym or club memberships, expensive holidays etc. As long as you can explain any “normal” expenditure and you’re not making silly or unnecessary purchases or going into your overdraft, it shouldn’t be a problem; just be aware that each lender will approach this differently. Whats changed since 2014 It used to be relatively easy to work out what size of mortgage you could get. Lenders would work this out using a guide known as the income multiple. They would multiply typically 4x your total income and assume that you could afford the repayments on that sort of sum. The lender would also take into consideration existing loans and credit cards when considering affordablity. Things changed April 2014 following a Financial Conduct Authority (FCA) initiative called the Mortgage Market Review (MMR). Mortgage lenders now had to check your full financial situation to make sure mortgage payments are affordable based on the current payable rate but also using a stress test which is sometimes as high as 7%. Please don’t think that this has made getting a mortgage impossible. In my experience things have become simpler and clearer with lenders acting more responsibly. What will the mortgage lender need to know? In addition to the usual personal information – name, age, where you live, etc. – you can expect the lender to ask you about the following: What evidence will you need When preparing for a mortgage interview you’ll need to gather together: • Payslips and proof of other earnings for at least the last 3 months • Credit card balance • bank statements for the latest 3 months • Proof of identity and address • Details of your current mortgage if you have one. Please feel free to come and see us at Blestium Financial Services where we will happily help you complete a budget and expenditure breakdown as well as an affordability check. mortgages, life insurance and finance specialists Over how many years would you like to repay the mortgage? Most mortgages are taken out over 25 years however a lender will let you increase this usually up to retirement age or decrease the term as long as you can afford to do this. Tell me about your monthly bills and outgoings One of the biggest factors affecting how much you can borrow will be what’s seen as your fixed monthly outgoings. The adviser will ask how much do you currently or intend to spend on the following • Utilities (gas, electricity and water bills) • TV and phone packages • Council tax • Insurances • Essential travel • Housekeeping, food and toiletries • Any maintenance for a child or spouse • School or college fees • Savings and investments This is also a good exercise to do yourself as responsible monthly budgeting is key to buying a house. 4 Re Mortgage 4 Overseas Mortgages 4 Buy To Let Mortgage 4 Let To Buy 4 Help To Buy Top Floor, The Market Tavern, 26 Agincourt Square, Monmouth NP25 3BT E: firstname.lastname@example.org Tel: 01600 775393 4 Equity Release 4 Protection 4 Asset Finance 4 No broker fees Professional Impartial Confidential www.blestium.com
Brand new, affordable homes for sale at King’s Wood Gate from just £95,500* MHA’s Homebuy scheme offers an equity loan to part-fund the purchase of your new home through MHA. For more information or to register your interest in buying an affordable home at King’s Wood Gate, located off the Wonastow Road in Monmouth, please contact Sarah Harrison on 0333 207 9000. www.mhahomes.co.uk/kingswoodgate *Shared equity. Homebuy offers funding of 50%, 40% or 30% of a property’s purchase price. Terms and conditions apply.