The dark art of mort­gage af­ford­abil­ity ex­posed

The Oban Times - - Property/Feature -

Un­wary first-time buy­ers could be pushed need­lessly into smaller prop­er­ties or dif­fer­ent ar­eas due to the ‘dark art’ of mort­gage af­ford­abil­ity cal­cu­la­tors, a This is Money in­ves­ti­ga­tion can re­veal.

Based on a joint in­come of £75,000 and a de­posit of £25,000, This is Money un­cov­ered a near £200,000 dif­fer­ence be­tween the most and least gen­er­ous in­dica­tive max­i­mum loan amounts. For those who do not shop around, this could se­ri­ously dent their as­pi­ra­tions.

The rise of mort­gage lenders’ af­ford­abil­ity cal­cu­la­tors has seen most banks and build­ing so­ci­eties di­rect those look­ing for a home loan to them, to see what they can bor­row. Yet the gulf be­tween these in­dica­tive sums across lenders is huge.

Buy­ers should be aware that mort­gage cal­cu­la­tors are a sim­ple de­vice used as a mar­ket­ing tool. ‘ What they re­ally are is an in­di­ca­tion of a lender’s ap­petite for a cer­tain bor­rower. At a given time, it may be look­ing to up­sell af­fil­i­ated prod­ucts and ser­vices to, say, young fam­i­lies who have lots of fi­nan­cial needs - such as want­ing a per­sonal loan to buy a new car, for ex­am­ple,’ said Si­mon Collins, a mort­gage ex­pert at bro­ker John Char­col.

‘Mort­gage af­ford­abil­ity is a real dark art,’ said Collins. ‘It’s prac­ti­cally im­pos­si­ble for con­sumers to work out which lender will of­fer the most gen­er­ous mort­gage amount. The most in­for­ma­tion they can at­tempt to get their hands on is the lender’s cri­te­ria, which they are meant to pub­lish un­der the in­come sec­tion of their mort­gage in­for­ma­tion that ap­pears on their web­sites.’

There­fore, buy­ers be aware of this when start­ing your re­search. It is usu­ally best to visit and speak to as many bro­kers as you can. Lend­ing cri­te­ria dif­fer from lender to lender and change fre­quently, so it is im­por­tant to speak to an ex­pe­ri­enced bro­ker or mort­gage ad­viser to en­sure you have up to date in­for­ma­tion. Af­ter all, you want to make an in­formed de­ci­sion on one of the big­gest and most im­por­tant pur­chases you will ever make.

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