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In this week’s newsletter, we’re discussing an essential element of the mortgage process that could significantly influence your journey to home ownership – the invaluable role of a mortgage broker.
With the current landscape showing minimal variation in product rates among major lenders, the decision-making process extends beyond just comparing rates. It’s about finding a deal that truly fits your unique financial situation.
Beyond Rates: Understanding Lender Criteria
At first glance, the mortgage market might seem straightforward, with major lenders offering similar product rates. However, when it comes to the maximum loan amount based on your income, the scenario becomes more nuanced. Factors such as the number of dependants, financial commitments, and employment status play a crucial role in determining your eligibility and the loan amount.
Interestingly, even among the top lenders who can lend up to 5.5 times your income, you’ll find major differences in the maximum loan amounts offered. This variance stems from each lender’s specific affordability criteria, which can significantly impact the loan amount for which you qualify.
One lender might offer a more favourable loan amount due to their interpretation of your financial stability, while another might calculate a lower amount based on their risk assessment criteria.
A Case in Point
Consider the recent experience of a couple with a joint income of approximately £95k and total commitments amounting to £30k. Despite approaching three major high street lenders known for their high income multiple lending, the maximum loans offered to them varied astonishingly – with a difference as stark as £115k between the offers. This discrepancy underscores a crucial fact: lenders’ criteria and their interpretation of financial stability and risk can significantly influence the loan amount you’re eligible to borrow.
The Role of a Mortgage Broker
This is where the expertise of a mortgage broker becomes invaluable. Our team specialises in dissecting these intricate details, ensuring that our clients are matched with the most suitable mortgage deals.
We take into consideration all the factors that affect affordability and eligibility, from joint incomes and financial commitments to the specific criteria of each lender. Our commitment is to navigate this complex landscape on your behalf, advocating for your best interests and securing a deal that fits your unique situation perfectly.
Speak to our award winning mortgage brokers
Whether you’re considering entering the market or adjusting your investment portfolio, the current climate is ripe with potential.
Get in touch now on 0208 364 3444 alternatively click here to schedule a free consultation call. Be sure to ask about our Flexi-Lock service to ensure you can lock in the best rate.
Choice widens for fixes while rates rise modestly
According to Moneyfacts UK Mortgage Trends Treasury Report the overall average two and five-year fixed mortgage rates rose, but more modestly compared to a month prior.
The overall average two- and five-year fixed rates rose between the start of March and the start of April, to 5.80% and 5.39% respectively. The average two-year fixed rate stands 0.41% higher than the five-year equivalent.
Product choice overall rose month-on-month, to 6,307 options, its highest level since February 2008 (6,760) and the average shelf-life of a mortgage products stabilised to 22 days, up from 15 days at the start of March 2024. The lowest shelf-life average on their records was 12 days in July 2023.
Mortgage product availability continues to thrive, with the overall choice of residential products reaching its highest point in over 16 years!
UK homeowners renting out rooms amid high mortgage rates
UK homeowners are renting out a room in their house as a way of making some extra money amid the cost of living crisis that has pushed mortgage rates to record highs.
Over one in every 10 (12%) London homeowners have started renting out a room in their house in the past year to generate additional income, according to Barclays Consumer Spend report.
The trend is not exclusive to the capital, as some 3% of homeowners across the UK have also rented out a room in their property to make a bit more money.
UK homeowners have been particularly hit by cost of living woes. The data from the Barclays report showed that one in six (16%) aren’t confident about their ability to meet their mortgage or rental payments, and 18% of those with mortgage or rent payments are adjusting their spending habits to cope with rising housing costs.