Back in the day, your choice of mortgage lender was restricted to which bank or building society was on your local high street. Appointments were made with the manager and he or she would decide how much they would let you borrow to buy your property. These decisions were based on affordability but also their local knowledge of you and your family and where you worked.
Today, there are around 100 mortgage lenders in the UK. Most continue to be banks and building societies but there are a number of specialist lenders that you’ve probably never heard of. You’re no longer limited to your high street but can apply online to mortgage lenders all over the country who will consider your application on a number of different lending criteria specific to them.
What do mortgage lenders look for?
Most mortgage lenders focus will be on your credit rating and will consider:
- Recent applications - if you’ve applied for any other forms of credit. A high level of new enquiries on your credit report can indicate financial trouble.
- Payment history - whether you pay on time and if you’ve had any missed payments.
- Credit Utilisation - whether you are using all the credit you have available to you. You can get better rates if you’re not, so it’s worth cancelling some credit cards you no longer use.
- Negative marks - bankruptcies or CCJs which would make lenders reconsider your application as being too risky.
Lenders use an internal mortgage calculator to determine how much they are willing to let you borrow. The Bank of England has recently relaxed its rules meaning that we are seeing some changes to how much clients may be able to borrow compared to previous calculators.
This does not mean that there will be no affordability checks. Current regulations limit how large a mortgage can be, depending on the income of the borrowers. It’s felt that this measure will adequately protect the lender and the householder from over-committing themselves. We would recommend clients contact us to see if the recent changes will benefit them and their borrowing capacity. Our initial advice is without obligation or cost to the client.
Government’s plans for intergenerational mortgages
It was announced at the beginning of the month that the Government was looking at more creative ways to support people into home ownership. One idea was the introduction of 50 year generational mortgages that can be passed from parents to their children. Naturally, this has caused much discussion in mortgage forums and political circles as to the pros and cons. We’ve seen little comment from the major lenders but then many already offer mortgage terms up to 40 years anyway.
Best mortgage deals
With a wide number of lenders and calculations changing all the time, there is a high level of flexibility in the mortgage market. With different interest rates, from fixed rates to tracker and mortgage terms that vary from 2 to 40 years it’s easy to see how difficult it can be to compare mortgage products.
At Poole Townsend or mortgage brokers are not tied to any particular lenders. We can determine the best options for you given your circumstances and credit score to ensure you have the best mortgage deal for you.
We’re here to offer support and guidance every step of the way, leaving you to concentrate on the more important things - like getting excited about your new property!
Get in touch today to book your appointment.