5 Ways to maximise mortgage borrowing

Hi, this is Ceri…

One of the questions we get asked the most is how to maximise mortgage borrowing. It makes sense, as everyone wants to make their deposit stretch as far as possible.

With interest rates increasing dramatically in the last few months, you may feel you’re being priced out of the housing market. Sure, lots of people will tell you a housing price crash is inevitable (I’m not so sure at all). But my advice to any client I speak to is simple – you’re almost always better off owning your own home.

I don’t know of a single 10 year period where house prices were less at the end of the period than they were at the beginning. House prices are incredibly resilient. The last major recessions in the UK were in 2008 and 2011, and by 2014 house prices were back at the level they were prior to the recessions. To recover from a double recession in this manner shows just how resilient and valuable an asset houses are. The boom in house prices also shows how utterly useless we are as a nation at building houses, but that’s another matter entirely!

How much can I borrow?

At Remoo Mortgages, one of the questions we’re asked most often by clients is, ‘How much can we borrow?’. There’s a straightforward answer and that is, it’s usually between 4-4.5 times your single or joint income. The not-so-straightforward answer is, it depends on multiple factors!

Your credit score or conduct, the amount of debt you have, your age, the term over which you want to borrow and the Loan to Value (LTV) can all have a significant impact on how much you can borrow.

We often have access to the same affordability calculators that the lenders themselves use, so we can provide you with accurate borrowing figures to help you narrow your search for a new home or calculate if you can increase your borrowing to pay for mega extension you’ve always wanted.

5 ways to maximise mortgage borrowing

If you’re beginning to feel that the latest house price rises are pricing you out of the market, then here are 5 ways to maximise how much you can borrow:

1. Clear Existing Debt

If you’re purchasing a property, any debt you have can count against the amount you can borrow. Loans, Student Loan, Credit Cards, Store Cards, Car Finance, Buy now Pay later and anything else that appears on your Credit Profile or a lender identifies on you bank statements or payslips can reduce the amount you can borrow. Clear are much as you can to maximise what you can borrow.

2. Consolidate Existing Debt*

If you’re re-mortgaging, and you need to increase your borrowing (you can read more about that HERE), for example you want to build that mega extension rather than move home, you can consolidate your existing unsecured debt into your mortgage. Not all mortgage advisors have the permissions to advise on debt consolidation, but we do. There are additional risks you need to consider before doing this, but we can provide you with an estimate of long term cost of consolidating debt allowing you to make a informed decision if you’re looking to maximise that amount you want to borrow.

3. Use Your Benefit Income

If you have dependant children, then this can reduce the amount you are able to borrow, but many people didn’t know that if you’re in receipt of child credit you can actually declare this as income in your mortgage application. It’s not limited to Child Benefit either – Child or Working Tax Credits, Universal Credit, Carers Allowance, Disability Benefit, Personal Independence Payments and more can all be declared as income and may help you borrow what you need.

4. Check Your Payslips

Overtime, Shift Allowance, Weekend Allowance, Night Allowance, Unsociable Hours, Bonus, Commission… ANYTHING that appears on your payslip as income can be declared to a lender and they will take a view on if it’s acceptable. The one that I get asked about often is Expenses, sadly this is your employer reimbursing you for money you’ve already spent rather than earned, so it’s likely not acceptable, but if you’re in receipt of additional income outside of your standard salary or pay then many lenders will consider theses incomes on an application.

5. Declare your ‘Side Hustle’

Typing ‘Side Hustle’ makes me want to throw my laptop across the room! But it’s becoming more and more common for people to have more than one employment or have a hobby that they’ve managed to monetise. If you’re earning money from your hobby or Side Hustle, then you should probably speak to an accountant to see if you need to file a tax return and if you do the Net Profit you make from your hobby can be used when applying for a mortgage.

 

*The legal bit

By consolidating existing debt please remember that although you may achieve short term savings it will result in extending the term of the loan and in turn increase the total cost in most circumstances. You are also securing a previously unsecured debt against your home.

Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage or any other debts secured on it.

 

 

 

 

 

 

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