Lender affordability stress test

mrfirsttimebuyer

Hello,

I am looking for guidance on lender affordability stress testing, currently my bank statements show no evidence of spare capacity in monthly expendature, I guess I need to tighten up for 6 months before applying.

Any advice greatley recieved.

Thanks in advance.

ACG

Most high street lenders use ONS figures (basically standard figures) for affordability purposes.

They are not going to go through your statements line by line and some do not even ask for statements.

I suppose the thing is, the lender needs to deem it affordable, you can check their affordability calculator(s) online and you need to be comfortable that the repayments are affordable also.

MovingForwards

What guidance are you looking for?

Can you afford a 9 - 11% interest instead of about 2%?

mrfirsttimebuyer

I have a DIP from Barclays, Halifax & Natwest.

My best quote is 1.97% and £1250 payments over 5 years, I could afford 4-5% interest but have no evidence to back this up in terms of spare capacity.

Over the last 6 months I have been paying off CC debt at £1500 a month.

ACG

Why are you doing so many DIPs? Most of my customers end up with 1 and half the time that is done just before the full application goes in.

It appears you are passing affordability for the lenders perspective.

mrfirsttimebuyer

I am just worried that my bank statments will cause a rejection.

Carrot007

mrfirsttimebuyer wrote: »

I am just worried that my bank statments will cause a rejection.

Then ignore DIPS and go for the real application. It is what I did as I was concerned with some issues. And no I had not even chosen a house at that point.


But no spending all your income is not a cause for concern. Your bills/essential spending will leave an amount that is spare. And this is what they are looking for even if you spend it all at the moment.

ACG

mrfirsttimebuyer wrote: »

I am just worried that my bank statments will cause a rejection.

Having 10 DIPs wont alter their take on your bank statements.
Speak to a broker, brokers have access to account managers to run things by who are like a middle man between applicant and underwriter or bite the bullet and just make an application.

mrfirsttimebuyer

Thanks all for your thoughts, I am going to a broker.

Thrugelmir

mrfirsttimebuyer wrote: »

Over the last 6 months I have been paying off CC debt at £1500 a month.

Have you finished paying off/reducing youir debts?

asm89

So essentially you have £1500 a month spare minus the 3% balance minimum repayment banks take into account for credit card debt.