Affordability tests are being revised in the wake of the cost-of-living crisis. With house prices still at a high, improving your affordability can help your chances of securing a mortgage. Especially for first time buyers looking to raise a deposit. In this article, we look at some effective ways to improve your affordability.
The affordability test for a mortgage application is designed to protect consumers against being sold loans they are can’t afford. This is an essential part of the process, but an added obstacle for some.
With criteria now set to be tightened, it may be time to look at improving your own affordability wherever you can.
Cutting costs
One of the more obvious solutions is to cut unnecessary costs. The lower your monthly outgoings, the more you’ll be able to afford. This may appear to state the obvious, but the impact that making cutbacks can have may be more significant than you’d think.
Reducing your outgoings by just £100 a month could add up to £10,000 to your maximum loan. Obviously this isn’t a possibility for everyone, but if you’re in a position to make some sacrifices, it could really help to improve your affordability. For those who may find cutting costs a little harder, perhaps trying to switch providers for services such as TV packages could result in you being offered special deals that can help you save.
Reduce your debts
If you have outstanding loans, not repaying them before applying for a mortgage could affect your affordability. It may be advisable to reduce debts where you can before any mortgage application is made.
Student loans are often treated differently by lenders, and you may not have to reduce them before getting on the ladder.
If you’d like to discuss the options available to you, contact us today.