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Written by:
Alison Gibson
Ascot Mortgage Expert
Last Updated:
23.10.2023
Written by:
Alison Gibson
Ascot Mortgage Expert
Last Updated:
23.10.2023
Over recent years, with mortgages being harder to obtain, there has been a new urban myth generating, namely that you need to be earning mega bucks to even dream of getting a toe on the property ladder.
That does not necessarily have to be the case: what lenders largely look for is a borrower’s ability to pay their mortgage, which means a low income mortgage can be a real possibility.
Of course, making sure that somebody can pay their mortgage is one thing, but the banks still need to calculate how much is the maximum they will be prepared to lend to each individual. The traditional figure used to be three times the main, or sole, applicant’s salary, but since the recession the borrower’s ability has been much more important, and this can also go in favour of the borrower, even if you are on a low income.
Using a mortgage broker to help you find the best mortgage for your situation. By using a broker not only will you be sure that you are borrowing the most that you can have, but also that you are working with the best lender for your circumstances. Using a broker also means that you are not running unnecessary applications, which can impact on your credit rating: critical at a time when mortgage lenders can be selective about who they lend to.
Traditional methods for working out your mortgage amount
Some lenders still work on the basis of four times a joint income, so if you earned £20,000 and your partner earned £10,000, you could potentially be able to lend £120,000. There is a little variation available in this calculation, where excellent credit ratings are rewarded with a bigger loan amount. For single applications, the amount that you can borrow can be up to five times your salary, so for those earning £20,000, then the figure could be £100,000.
Mortgages based on affordability
Other lenders calculate the amount based on affordability. This reflects much more the idea that, since the recession, simply looking at a piece of paper does not prove that an applicant can pay their mortgage. Lenders are now choosing to assess a person’s income and outgoings to determine if the person is able to pay their mortgage or not. This could either increase or decrease the actual amount you can borrow, but as some lenders are prepared to consider other forms of income towards your actual income, for example Child Maintenance payment, it is quite possible that your borrowing ability is better than first expected. Each lender is different which is why it is recommended that you speak to an experienced mortgage broker such as Ascot.
Ascot Mortgages can discuss these methods with you, and tailor your needs to the right lender. If you have low incomes, then it might be better to use the salary calculation, but if you have higher outgoings, or debts, then it might be more sensible to go with a lender who uses the affordability calculator.
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Alison Gibson
Ascot Mortgage Expert
Remortgage
Remortgaging is applied when you keep
living in your present property while applying for another mortgage deal with a new lender. Before finding out how to remortgage and get the best offers from experts like Ascot Mortgages, you have to check meeting what parameters of the deal that can help you succeed the most. The range of background factors varies a lot — from the recently changed loan-to-value ratio or your existing agreement coming to an end.
Whether you are trying to get a more beneficial deal or searching for funding to improve your home conditions, remortgaging is one of the most advantageous scenarios to consider.
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FAQ
The loan to value (LTV) rate determines how much you can borrow. A lower LTV typically results in better interest rates and more choice of lenders for remortgaging, as it represents lower risk to lenders.
Yes, you can choose to remortgage with a different lender. However, this should be based on factors such as interest rates, fees, and the terms and conditions of the potential new mortgage. Contact us today and we can help you to find the best option to suit your needs.
Most lenders will require a valuation of your property when you remortgage to ascertain its current market value. Some lenders may use an automated valuation model instead of a physical appraisal. Need help navigating this? Reach us today to discuss your mortgage needs.
Yes, when remortgaging a solicitor is required for both the mortgage lender and the applicant. Some mortgage lenders offer mortgage products that have a free legal facility. They handle the legal paperwork and advise on potential issues.
The amount you can borrow with a remortgage depends on multiple factors including your income, outgoings, credit score, the value of your property, and the lender’s criteria. Easy contact us to discuss your remortgage borrowing capacity.
The remortgaging process typically takes between 4 to 8 weeks, but can be quicker or slower depending on your circumstances and the lender’s processes. For help in understanding what you can expect, contact us today!
To improve your chances of being accepted for a remortgage, maintain a good credit history, ensure your income is stable, and reduce your overall debt. It can also help to have a clear purpose for remortgaging. Need advice? Reach us today.
It is possible to remortgage with bad credit, but options may be limited and interest rates may be higher. Some specialist lenders provide services for people with poor credit histories.
Applying for a remortgage will likely require a credit check, which can leave a footprint on your credit file. However, the impact on your credit score is usually minimal and temporary.
If your remortgage application is rejected, seek to understand why. It could be related to your income, property value, or credit score. You may need to consider alternative lenders or improve your financial situation. Contact us today for a free consultation and guidance on your options.
Yes, self-employed individuals can remortgage. However, you’ll need to provide more evidence of your income, usually in the form of HMRC documents for the last two or three years. If you’re self-employed and considering remortgaging, feel free to reach out to us whenever you’re ready to discuss this further.
Seeking advice on remortgaging can be beneficial to understand the costs, benefits, and potential risks. Professional mortgage advisors can guide you to make the best decision based on your circumstances. Need professional advice? Easy reach us and we always here to help!
Yes, there are fees involved in remortgaging. These can include exit fees from your current lender, arrangement fees for your new mortgage, valuation fees, legal fees, and broker fees. It’s important to factor these in when considering a remortgage.
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Legal
Ascot Mortgages authorised and regulated by the Financial Conduct Authority and can be found on the FCA register (www.fca.org.uk) under reference 776062. The FCA do not regulate some forms of mortgages. The guidance and advice contained in this website is subject to UK regulatory regime and is therefore restricted to consumers based in the UK. There may be a fee for mortgage advice. The precise amount will depend upon your circumstances but we estimate it will be £399 per mortgage account. Ascot Mortgages Ltd give you the option to pay a non-refundable fee of £879 payable with the application. If this option is taken, Ascot Mortgages Ltd will refund any procuration fee received by the lender.
Ascot Mortgages Limited is registered in England and Wales and have their registered office at 8 Webster Court, Westbrook, Warrington, WA5 8WD. The company’s registration number is 06764971.
We are a credit broker, not a lender. We work with the whole of the lending market. We may receive commissions that will vary depending on the lender, product, or other permissible factors. The nature any commissions model will be confirmed to you before you proceed.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE
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