First Time Buyers Guide
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CharltonOnLine.com is a trading name of Charlton Marketing and Development Ltd.
CharltonOnLine.com is a trading name of Charlton Marketing and Development Ltd.
Your home may be re-possessed if you do not keep up repayments on your mortgage.
What you are trying to establish here is the maximum amount lenders will be prepared to lend to you, provided all of your other circumstances meet their requirements. With this knowlege, you will be able to determine the property price range within which you should be looking.
How lenders view first time buyers
What could you borrow
Last updated 15 March 2009
Lenders are cautious people and regardless of their recent bad press coverage, when they lend money they want to be very sure that it will be paid back. Although Lenders can and will repossess a property if the mortgage falls into serious arrears, they don't want to get into such a situation and will check mortgage applicants very thoroughly. Primarily, lenders will look at your proven earnings and fixed commitments and having established what these are, will lend an amount based on the result of these figures multiplied by a factor, roughly between 3 and 4.5. This factor can vary from lender to lender.
What they do is take your gross annual income and add overtime and bonuses, provided these can be guaranteed to be regular, plus any other income that can be relied upon. From that figure they deduct an allowance for debt payments, usually for loans it's the monthly payment multiplied by 12 and for credit cards it's 5% of the balance multiplied by 12. The result is then taken as your income to which they apply their multiplier.
What they do is take your gross annual income and add overtime and bonuses, provided these can be guaranteed to be regular, plus any other income that can be relied upon. From that figure they deduct an allowance for debt payments, usually for loans it's the monthly payment multiplied by 12 and for credit cards it's 5% of the balance multiplied by 12. The result is then taken as your income to which they apply their multiplier.
Click on the symbol to take the next step
Affordability
Self Employed People who are first time buyers
This guide concentrates on people who are in employment, as these make up the majority of First Time Buyers. However, there are still many who own businesses or work under contract so if you are in that category, you will need to provide proof of your income through your accounts or by other proven means. As this guide is geared to emloyment status, please call Charlton Financial Services Ltd., to discuss your particular circumstances rather than attempt to use the calculator.
Step 2
Here ia a simple calculator to helpfirst time buyers assess their likely mortgage borrowing level. It's in the form of an Excel spreadsheet and can be accessed by clicking on the button. You will need to have Excel on your computer to use this calculator.
Next Step
Now that you understand how much you can borrow and have a reasonable view of what section of the market you are aiming for, it's time to move to step three and establish your affordability.
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