When it comes to getting a mortgage, many people assume they know roughly how much they can borrow, often this is based on a quick online calculator or a brief chat with their bank. But what if we told you that you might be able to borrow more than you think?
As mortgage brokers, we see this all the time. Clients come to us believing they’re limited to a certain amount, only to be pleasantly surprised when we find a lender who can offer them a much higher borrowing capacity based on their unique circumstances.
So why does this happen? The answer lies in lender criteria - and that’s exactly why speaking to a broker is so important.
Not all lenders calculate affordability the same way. Many people think that all lenders follow the same rules when deciding how much you can borrow. But in reality, every lender has their own unique affordability criteria.
For example:
Two different lenders could assess the same income and financial profile and come up with completely different loan amounts - sometimes with a £50,000+ difference in what they’ll lend. That’s why limiting yourself to just one lender (especially your current bank) could mean missing out on a much better mortgage offer elsewhere.
When you go to a single bank, you’re only getting their lending criteria, which may be more restrictive than others. But as brokers, we:
Instead of guessing or assuming what you can borrow, we give you a clear and accurate picture of your true affordability across multiple lenders.
We’ve seen the situation time and time again, when a new client arrives with a preconceived idea that they won’t be able to afford their perfect home and has been looking at smaller properties or less favourable locations than they would ideally like. When we look at alternative lenders they are often delighted to find that they can widen their property search.
At the end of last year, we had a couple who thought their dream home was out of reach: James and Sarah, a young couple in their early 30s, had been tirelessly searching for a home in their desired area but were struggling with affordability. James was self-employed as a contractor, and Sarah had recently received a promotion with a significant portion of her earnings coming from bonuses. When they approached their bank, they were told that only a fraction of Sarah’s bonuses would be considered and that James’ fluctuating income made him a lending risk. The bank’s mortgage offer was far lower than they needed, forcing them to consider smaller homes in less desirable areas.
Feeling disheartened, they came to us at Calluna Financial for a second opinion. We reviewed their full financial picture and approached lenders who specialise in self-employed income and bonus-heavy salaries. By leveraging our knowledge of the market, we found a lender who considered Sarah’s full bonus history and James' last two years of earnings, rather than averaging out his entire contracting career. As a result, their borrowing power increased by £75,000, allowing them to put an offer on a home they had originally thought was out of their budget. A few months later, they moved into their perfect property - proof that the right mortgage broker can make all the difference!
By speaking to a mortgage broker as early as possible in your property search, you can benefit from their knowledge of the current mortgage market. They will be able to offer you practical advice based on your individual circumstances and help you prepare in advance of making your mortgage application. They will look at your financial position and suggest strategies to take that could increase your borrowing capacity when you come to apply to mortgage lenders.
Example strategies that could potentially increase your borrowing capacity:
If you’ve checked with your bank and been told you can’t borrow as much as you’d hoped, don’t give up just yet. Speaking to a mortgage broker could open the door to more borrowing power and better mortgage options.