Prior to applying for mortgage from the Best Mortgage Company, you would be required to think about more than simply thinking about affording the monthly repayments. The mortgage providers would view your income along with outgoings to see whether you could pay the monthly payment with ease provided there has been rise in rate of interest or change in circumstances. It would be pertinent that you should earn about how the lenders would assess how much you could actually borrow.
How Mortgage Company assesses your affordability
In the days of old, mortgage lenders would base their assessment on how much you could afford by determining the multiple of your present income. It would be known as loan to income ratio. For instance, in event of your annual income being a specific amount, you would be able to borrow at least three to five times the income. Therefore, when you actually look forward to applying for a mortgage from the Best Mortgage Company, they would determine the cap to income ratio at four and a half times your actual income.
The Mortgage Company should also assess the level of monthly payments that you could afford. It would be done when they consider the different personal and living expenses along with your income. It would be known as affordability assessment. The Mortgage Company should also look ahead and test your capacity to repay the mortgage.
The potential rise in rate of interest and possible changes into your lifestyle would also be taken into consideration. It would be inclusive of taking a break in your career, having a baby, or redundancy. In event of the lender thinking you are unable to afford your monthly mortgage payments; the Mortgage Company would limit your limit of borrowing money. You could also estimate your ability to borrow on a mortgage calculator.