What’s your go-to lender for clients who want to maximise their affordability?
Chances are, you have a shortlist of lenders you know offer higher maximum income multiples than others, but the reality isn’t that simple.
When it comes to affordability, the individual circumstances of your client can make a significant difference to the lenders that are able to offer the largest loans.
To demonstrate the diverse range of lenders and loan sizes that could be right for your clients, we ran some scenarios through MBT Affordability, which provides accurate affordability results for up to 30 lenders from a single calculator that automatically and intelligently completes the individual lender calculators and collates the results.
Here’s a brief description of each of those scenarios and the resulting affordability calculations.
Scenario 1: First-time buyer
Single applicant, living with partner, with an annual salary of £46,000, student loan and some unsecured debts, looking to borrow 88% LTV on a property of £260,000.
Top three results:
- Santander £230,000
- Virgin Money £219,000
- M&S Bank £218,500
The smallest loan offered to this applicant was £175,000
Scenario 2: Company director
Married company director, with a 50% shareholding, drawing salary and dividends that have averaged a total of £85,000 over the past three years. He has an unencumbered second home, two dependents and no unsecured debts, looking to borrow just over 50% LTV on a property of £750,000.
Top three results:
- Coventry BS £756,000
- Aldermore £731,044
- Newcastle BS £600,000
The smallest loan offered to this applicant was £252,192
Scenario 3: IT Contractor with buy-to-let properties
Married IT contractor, with a day rate of £750, owns two mortgaged buy-to-let properties and a second home. She has no unsecured credit commitments and is looking to remortgage at less than 40% LTV on a property valued at £1.25m.
Top three results:
- Newbury BS £909,000
- Scottish Widows £808,200
- Halifax £808,200
The smallest loan offered to this applicant was between £577,876 and £693,451.
(Affordability searches carried out on MBT Affordability on 27 March 2019)
In each of these scenarios, not only is there a significant difference in the loan sizes that are available to the clients, but the top three lenders offering the most generous affordability calculations changes on each occasion.
This reflects the very different approach that different lenders take to assessing income and outgoings and how much this can influence affordability results. It also demonstrates the limitations of assuming income multiples to estimate available loan sizes on individual cases.
When affordability is key for your clients, only 100% accurate searches can provide the results they need – anything else could just leave them short changed.
Lewis Lenssen is managing director at Mortgage Broker Tools
