A mortgage can be the key to a person being able to purchase a property or piece of land. However, it’s not only finding the right deal for one’s personal circumstances which is important. Getting approved by the lender will be a top priority for borrowers. In order to find out the mortgage amount which one can afford, it’s possible to use an online mortgage calculator.
During the application for a mortgage, a lender or mortgage broker will tend to ask the applicant a series of questions.
This is to work out what kind of mortgage the borrower is looking for, as well as the period length.
The Money Advice Service website adds: “They’ll also try to work out, without going into too much detail, your financial situation.
“This is generally used to provide an indication of how much a lender might be prepared to lend you.”
Rosita Janulion, Mortgage Expert at Habito has explained the importance of full disclosure of one’s finances at this stage.
She told Express.co.uk: “The one thing always do when checking your affordability, is to fully disclose your financial situation and answer each question truthfully.
“If much further down the line, your credit score shows unpaid debts or a CCJ [County Court judgment] that you’ve not disclosed on your mortgage application, the bank or lender can automatically reject your application without giving you a reason.
“This could put you under much greater time pressure to get your mortgage financing and potentially risk you not getting the home you want.”
Ms Janulian also said that the “single biggest factor affecting how much you can borrow” is income.
“By ‘income’, lenders don’t just mean your salary, they mean every type of income you get over the year, added together: your salary, bonuses, overtime, investments, company net profit, rental income from other properties, everything,” she said.
“If that changes year on year, a rough average from over the last two years is OK, if you just want a rough check of how much you can borrow.
“When it comes to your application though, it’s worth knowing that different lenders will use a different proportion of these income types and will ask for proof such as payslips, tax returns, business accounts.”
So, how can a person get a rough estimate of how much they can borrow? Ms Janulion advised making use of an online mortgage calculator.
She said: “Finally, the best place to get a rough idea of how much you can borrow is by going online and checking a mortgage calculator. But, a word of warning – these are simplistic and only look at your income.
“For a more detailed idea of what you can borrow, you should speak to a mortgage broker or bank adviser who’ll look at your current account statements, take into account any debts you’re paying and your future plans, to get a much more accurate assessment of how much you could borrow.
“Many brokers are now online and free and can give a more detailed lending figure without doing a hard credit check.”