Mortgage Questions Answered

Once you decide to get a mortgage, the first question that comes to mind is, ‘how much can I borrow?’

The answer lies in these 3 key questions:

·         How much do you earn?

·         How much is the property worth?

·         How much does the mortgage lender think you can afford?

The amount that you can borrow will vary from lender to lender but the thumb rule is three and a half times your annual salary.

If you have a good mortgage broker, you may be able to even get up to 4 times your annual salary.

Most mortgage brokers have a mortgage calculator on their websites.  Using these mortgage calculators can help you better understand the mortgage options. They also tell you about your mortgage payments, along with the insurance premiums, and how the rates of mortgage might affect your payments. These calculators will assist you in calculating joint mortgages and can prove extremely helpful to couples to plan their mortgages well. You can easily find out how much you have to pay, using these calculators.

The secret to acquiring a loan easily is simple.

·         Have a regular income

·         Have good credit history

An experienced mortgage adviser can assist you to find out the amount you can borrow as they have long-standing relationships with mortgage lenders, and can easily gauge how much you can stretch to. Every borrower has distinctive circumstances surrounding his situation and you will find that a single person will be able to borrow more, as opposed to his counterpart who earns equal salary but has high outgoings and college-going children.

Generally lenders will loan up to 75% of the property's value and this is referred to as the ‘loan to value ratio’. Others may lend up to 90 or 95% of the property's value while there are a even a few who will give you a 100% mortgage, the catch being that you pay a higher interest rate.

There will be situations when the lender will refuse the loan and this is when they think the property is too expensive.

It is important to bear in mind that what you can have a loan of, is not essentially what you can manage to pay for. If you are able to acquire a mortgage which extends your budget to the edge, but you have nothing to pay your expenses and other running costs for the house, then you know you are in trouble.