How to Determine How Much Mortgage You can Realistically Afford
If you’re planning to buy some property and apply for a mortgage, then you are most certainly entitled to congratulations; it’s an important decision that could possibly change your life and make your dreams come true. However, it’s well known that getting a mortgage application approved is not always an easy matter, and you need to watch out for certain things.
A mortgage is a very big commitment, one that will influence many years of your life. It’s something to be taken very seriously. What are the factors that you need to consider when applying for a mortgage? And how do you calculate your finances to ensure it’s to your advantage? Here’s how to determine how much you can realistically afford on a mortgage.
From the lender’s point of view
The lender considers the mortgage as an investment opportunity and will therefore do due diligence before engaging in that particular business deal – for the lender it’s a means to make money. For you it’s a means to make your dream come true. Both parties need to be satisfied and reasonably assured of the possibility of success in order for the deal to push through. If you want to understand the lender, put yourself in their shoes; would you lend yourself money?
Checking your details
Before you go out to your nearest mortgage lender and hand in that application, it pays to check your own details and see if it all truly adds up. Here’s what you should consider:
Check your income
Your income depends on your job or your business. However, the lender will consider any kind of income, including pensions, investments, income from child maintenance or marital support, overtime, commissions, bonuses, and so on. You will need to provide written evidence of this income.
Your expenses are important
Credit card payments, child support, utility bills – you name it; they will investigate it. Be prepared to provide written evidence. The lender may request to see your bank statements to get a better idea of your money flow.
The future is unsure
Are you secure in your job, a promotion, a pay raise? Do you plan to have children? The lender will want to know what your plans are for the future.
If you want to have a realistic view of what you can actually afford – or a good estimate of what the mortgage lender will afford you – then go online; there are plenty of sites which give you free mortgage affordability calculators. Also remember that you should avail of professional advice from a mortgage broker such as a mortgage broker Taunton from Open Vision Finance if you are unsure. Expert advice can save you plenty of money and hassles in the future.
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