What is the basis of Mortgage Lenders affordability Calculations
How National Statistics has become part of the mortgage assessment.
Mortgages are loans against a property, and importantly failure to keep up with repayments can result in losing your home, therefore Mortgage Lenders have a duty to assess affordability carefully.
Applicants should fully disclose their outgoings but they can be forgetful or underestimate their expenditure, particularly in they have never been homeowners before.
So how do Mortgage Lenders square the box? Well more and more are doing sense checks against National Statistics. The main Mortgage Lenders will have this in-built into their systems. Interestingly, once embedded they will make sure it meets their needs and refine them as more data from the Office of National Statistics (ONS) becomes available. For instance, most Mortgage Lenders question how many financial dependents the applicants have. In recent times, some Lenders have extended to asking their ages. This is clever stuff as a child of nursery age compared to one at school can be matched against a different ONS cost. Likewise, an elderly parent who lives, and is financially supported in the family home will have a different measure.
One of the other most noticeable innovations in this area is selecting data for the area the property is in. Regional differences in consumerism can be stark so again it enables the Mortgage Lender to be more precise when reconciling expenditure.
I’m a professional Mortgage Broker who can arrange mortgages with over eighty mortgage lenders. The use of ONS data may or may not provide the best outcome for you in terms of maximum mortgage lend. My experience can guide you accordingly.