How do lenders calculate possible lending?

robbiewilliams

I suppose all lenders may be different but how is possible lending calculated these days? Do they work on income multiples any more? What happens about loans etc are they deducted?

olly300

Affordability and income multiples.

So yes loans are taken into account.

So if the lender does 4x income, all other factors are equal and person A but has 2 children and a car loan while person B doesn't, person B can borrow more.

Thrugelmir

Lenders affordability criteria differs depending on their target market, the product applied for, and the individuals personal circumstances.

The wonders of computer technology make complex calculations relatively easy.

opinions4u

I'd suggest not thinking about how to borrow the most.

Think about how you'll meet the payments when rates double, a child pops out and an income stops.

Dan-Dan

lol @ a child `pops `out....too true though mind you !

kingstreet

Work out what you would feel comfortable paying for your mortgage, protection and other outgoings and work that into a mortgage amount based on a reasonable interest rate for the future.

For example, a comfortable monthly mortgage payment of £500, a rate of 5% and a term of 25 years equates to a mortgage of £86,000.

A budget planner and the help of friends and relatives already paying such bills may be helpful.

dotdash79

When I looked to buy I looked at what I would have to pay in rent for where I wanted to live. I added insurance plus 10% of the rent for maintenance \ improvements and took that from the maximum rent I would pay that gave a amount I could get a mortgage for per month.

I got lucky and I'm paying £100 per month less than the maximum amount, but I've got a good deal at the moment. It's handy that extra £100 at the moment to help pay for unexpected bills or bringing forward some of the improvement spending.