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    • spendaholic1986
    • By spendaholic1986 8th Feb 16, 4:47 PM
    • 54Posts
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    spendaholic1986
    How accurate are affordability calculators?
    • #1
    • 8th Feb 16, 4:47 PM
    How accurate are affordability calculators? 8th Feb 16 at 4:47 PM
    Hi there,

    I've been online using some of the high street banks more detailed affordability calculators to see what we could borrow and I just wondered how accurate they are?

    I am currently paying off credit card debt but even with my exsisting debt of 7000 the affordability calculators suggest we could lend up to 219900 on one and 176000 on another. Our combine income is 46,000 and we we're hoping to buy a house for between 170000-180000 with a 10% deposit.

    Do mortgage providers mark your creditworthiness in the same way a credit card provider would? I only ask as I have no late payments, defaults etc but only get offered bad credit products on comparison sites? I imagine this is due to my large credit card balances (paying off between 500-700 per month).

    Sorry for the ramble!
Page 1
    • MrJB
    • By MrJB 8th Feb 16, 4:51 PM
    • 287 Posts
    • 199 Thanks
    MrJB
    • #2
    • 8th Feb 16, 4:51 PM
    • #2
    • 8th Feb 16, 4:51 PM
    Any lender will consider the credit card debt against the amount you can borrow together with any other committed outgoings and travel costs etc.

    Have you filled in a more detailed affordability calculator like Nationwides? and make sure you fill it in accurately.

    The only way to get a real indication is when you get an AIP - they will do a credit check at the time that you make an application and it will take around 25minutes to do.

    I would have thought that a mortgage of 162,000 on a combined income of 46,000 is perfectly feasible - subject to your credit worthiness and the nature and transience of your income.

    I assume you're registered on the electoral roll at your current address etc?
    • ACG
    • By ACG 8th Feb 16, 5:34 PM
    • 18,868 Posts
    • 10,445 Thanks
    ACG
    • #3
    • 8th Feb 16, 5:34 PM
    • #3
    • 8th Feb 16, 5:34 PM
    The affordability calcualtors are as accurate as the information entered.
    99.9% of my applications go through without any hiccups on that front, however I had one on Friday where the underwriter came back and reduced the loan amount by 1800. The reason being is that the client had a car on finance she did not tell me about and was not on her bank statements. The client was in a position to put the extra down so no problems but it is all down to you really.

    The other thing is checking what the lender counts as a commitment - student loans, pension deductions are the 2 big ones clients do not think of in the main.

    As for credit cards and mortgages - they are very different. One is secured so offers the lender that little bit of extra security on one hand, but on the other hand the loan is much more so opens them up to extra risk.

    Its all about finding the right lender(s) for your circumstances.

    If in doubt, speak to a broker.
    I am a Mortgage Adviser
    You should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
    • lexia
    • By lexia 8th Feb 16, 8:33 PM
    • 48 Posts
    • 64 Thanks
    lexia
    • #4
    • 8th Feb 16, 8:33 PM
    • #4
    • 8th Feb 16, 8:33 PM
    Can't remember where I read this - lenders consider 5% of the total credit card balance as a monthly credit commitment. In your case it would be 350. Don't quote me on this though but perhaps brokers here can confirm/not.
    • ACG
    • By ACG 8th Feb 16, 8:48 PM
    • 18,868 Posts
    • 10,445 Thanks
    ACG
    • #5
    • 8th Feb 16, 8:48 PM
    • #5
    • 8th Feb 16, 8:48 PM
    Some do. Its not a bad calculation to use though as a ball park.
    I am a Mortgage Adviser
    You should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
    • Lolly88
    • By Lolly88 8th Feb 16, 10:01 PM
    • 318 Posts
    • 840 Thanks
    Lolly88
    • #6
    • 8th Feb 16, 10:01 PM
    • #6
    • 8th Feb 16, 10:01 PM
    How many lenders/which lenders count pension and student loan commitments as part of affordability? Most calculators I've used don't seem to show any difference when I put my student loan payments in but show around a 30-40k reduction when I put my monthly pension contributions as a fixed cost that I would be unwilling to stop.
    Homeowner

    • kayb3ll
    • By kayb3ll 9th Feb 16, 7:01 AM
    • 23 Posts
    • 5 Thanks
    kayb3ll
    • #7
    • 9th Feb 16, 7:01 AM
    • #7
    • 9th Feb 16, 7:01 AM
    I don't know what to think about the calculators. I did a few on different websites and got slightly different potential mortgages, but when I went to see our mortgage broker she advised that we had a lot more we could potentially borrow.

    I don't know if I was just being particularly overly critical in my calculations...!
    • amnblog
    • By amnblog 9th Feb 16, 7:44 AM
    • 11,069 Posts
    • 4,415 Thanks
    amnblog
    • #8
    • 9th Feb 16, 7:44 AM
    • #8
    • 9th Feb 16, 7:44 AM
    As I stated on a thread yesterday you can expect every 1,000 on a card to cost you in the order of 2,500 on potential mortgage lending.
    I am a Mortgage Broker

    You should note that this site doesn't check my status as a Mortgage Broker, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
    • Amy36
    • By Amy36 9th Feb 16, 8:28 AM
    • 7 Posts
    • 2 Thanks
    Amy36
    • #9
    • 9th Feb 16, 8:28 AM
    • #9
    • 9th Feb 16, 8:28 AM
    Does this apply to loans as well? How much would a loan of 9000 in my name and 7000 in my partner be likely to affect the amount they would lend us? On mortgage calculators they say they will lend us around 250k with our income and all loan payments and outgoings included on there but when they see the actually amount on the loans how much will they take off this? Any advice appreciated! Thanks x
    • kingstreet
    • By kingstreet 9th Feb 16, 8:51 AM
    • 35,054 Posts
    • 19,085 Thanks
    kingstreet
    That would depend on the monthly payments.

    Cards don't have a set monthly payment, so lenders typically take 5% of the balance. It's clear with a loan what is being paid.

    Enter the details into affordability calculators with and without the loan payments and you can see the impact of having loans.
    I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.
    • lexia
    • By lexia 9th Feb 16, 9:55 AM
    • 48 Posts
    • 64 Thanks
    lexia
    Calculators vary greatly. Nationwide's is very detailed, it's willing to lend me 215K over 25 years. Halifax (my lender) says 180K over same term (ironically my mortgage with them is higher). Barclays' calculator gives a lower figure, but there are no fields to enter extra income (child maintenance and child benefit), however their AIP said 198K.

    When in doubt, speak with a broker
    • spendaholic1986
    • By spendaholic1986 9th Feb 16, 10:58 AM
    • 54 Posts
    • 50 Thanks
    spendaholic1986
    Thanks everyone for the responses! I will be reducing my credit card balances by a couple of thousand before applying but it's useful to know the 5% of the balance taken in to consideration for affordability.

    We can afford to borrow more than what we need including the CC balances so hopefully shouldn't have many issues with lower balances.

    Just the credit check to worry about now!
    • guestiee
    • By guestiee 10th Feb 16, 9:56 AM
    • 35 Posts
    • 4 Thanks
    guestiee
    Hi all,

    I hope you don't mind me jumping on to this thread. I have an appointment with Coventry next week. Does anybody know if they include Student Loans and Pension payments in the affordability calculation. We are both teachers so these are both quite high for us. I have read not every mortgage provider takes them into account.

    Thanks
    • lauren_hb
    • By lauren_hb 10th Feb 16, 11:43 AM
    • 87 Posts
    • 62 Thanks
    lauren_hb
    Hi,
    So my student loan payments vary monthly as my wage varies monthly depending on if I've done overtime, worked weekends, nights or bank holidays where I get paid at a higher rate. So my payments vary from about 5-20 a month. How do I add this to an affordability calculator accurately?
    • nkkingston
    • By nkkingston 10th Feb 16, 2:49 PM
    • 471 Posts
    • 541 Thanks
    nkkingston
    L&C took student loan and pension into account for their DIP. They affect the amount of money you have available to pay the mortgage, so even if you find a lender that doesn't take them into account you should yourself. If it varies a lot, maybe check what you paid overall last year and divide by 12 for an average?
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