Ahh, the question everyone wants to know when it comes to home buying! This is something Beewise advisors get asked regularly, but there isn’t one answer as lenders take lots of different factors into account - scroll down to find out more.
What income will lenders use?
The most obvious one is your main income, but this can be made up of lots of elements depending on your job. If your employed, a lender will look at your basic salary, but also could consider regular bonuses, overtime and commission. If you’re self employed, borrowing will be based on your declared earnings, but lenders can also take into account dividends and net company profit depending on your circumstances.
Beewise also specialise in mortgages for fixed term and umbrella contractors, so if your income stream is slightly outside the norm, don’t worry! We work with lots of different banks and building societies so your advisor will have access to a whole host of deals, and we’re experts on the different lending criteria required to get the most suitable mortgage for your needs.
Income used isn’t just limited to salary though – some lenders will take into account benefits, maintenance, pension income, rental income and more.
Are loans and credit cards a bad thing?
Having additional debt doesn’t necessarily cause problems when it comes to borrowing, but lenders will take into account the regular monthly payments for these, the amount outstanding, and the length of time left on any loans. This means the amount of borrowing could potentially be reduced, but your Beewise advisor will calculate this at the initial stages and give options to suit your circumstances.
Other factors that can affect borrowing
There are lots of variables banks and building societies take into account, from general monthly outgoings like utility bills to the number of children you have and childcare fees. They’ll also consider the amount you’re planning to put down as a deposit, and even the length of time you want to fix your mortgage for.
Another big factor that can impact borrowing is your credit score. Less-than-perfect credit doesn’t have to mean you can’t get a mortgage or a decent amount of borrowing, but it may limit the mortgage deals available to you.
How Beewise FS Ltd help you
Beewise’s mortgage advisors collect the documents needed to review your financial situation and give you an accurate idea of how much you can borrow. And, because we work with so many different lenders, you could borrow more than you think! We’ll then get you an agreement in principle (AIP) – your provisional yes from the bank – often within 24 hours of receiving your paperwork. Most estate agents will want to see an AIP to confirm you’re a potential buyer, so if you’ve seen a house or need advice on a quick timescale we’re here to help.
Are there ways to borrow more?
Yes, there are plenty of different ways to boost your borrowing amount. This could be using a mortgage scheme such as Help to Buy or shared ownership, or by asking a friend or family member to go on the mortgage with you. That way, you’re increasing the income a lender will consider, meaning you can buy that dream home after all! Get in touch if you want to chat through your options.
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