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Can mortgage brokers get you a bigger mortgage?
It may be possible for a mortgage broker to get you a more extensive mortgage as they have the tools and the knowledge to know which lenders will lend you the most in your situation.
For instance, if you bank with Santander and decide to get a Santander for your mortgage as it is convenient for you and you have a relationship with them, it is not guaranteed that they would lend you the most money.
Lenders have different calculations when calculating a person’s affordability, considering many other factors.
A lender’s affordability calculator works off its own individual algorithm. This means that, for example, a payment for a debt (say, a payment of £300 per month) may make no difference to a person’s affordability calculation with one lender but may significantly affect another.
This can result in a person’s mortgage capacity varying by tens, sometimes hundreds of thousands of pounds, due to how an individual lender assesses an income.
An experienced mortgage broker should know which lenders lend more to people in certain situations.
If you are paid mainly in commission, some lenders do not like this and will offer you much less than another lender comfortable with this type of payment. This may be the difference between buying your house or not buying a home.
A mortgage broker can look at your total income, outgoings and deposit to determine which lender is likely to lend you the most money. This would result in a mortgage broker getting you a more extensive mortgage due to their experience.
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Can mortgage brokers get you a bigger mortgage on buy to let properties?
Mortgage brokers may be able to get you a bigger mortgage on a buy to let property than if you just picked a buy to let lender yourself.
Like residential lenders, buy to let mortgage lenders have their own way of calculating a maximum buy to let mortgage.
Based on the amount of rent a property achieves, a buy to let mortgage may be as high as 75% to 80% loan to value, depending on the threshold of the product.
Different lenders have a different stress test, which means that a certain amount of rent with one buy to let lender may get you the amount you need, but not with another.
When a lender applies a stress test to a buy to let mortgage, this is based on the percentage rate at which rental income needs to cover the mortgage balance.
These vary from lender to lender and can even be based on your tax rate.
Some buy to let lenders offer a more generous stress test to a lower rate taxpayer than they would for a higher rate taxpayer.
This means that a lower-rate taxpayer may get the level of mortgage that they need with a lender, but the person earning more money would not.
Even the length of the product can influence how much money you can borrow on a buy to let mortgage.
Some lenders offer a more generous stress test for a borrower taking a fixed mortgage for five or more years than they would on a product with a shorter fix.
This can make the whole process very confusing if you do not arrange mortgages for a living.
If the mortgage lender you had in mind cannot give you the amount you need, it is always recommended to talk to an experienced, professional mortgage adviser.
They may be able to get you a bigger mortgage than you would have got by picking a lender yourself.
Can mortgage brokers get you a more extensive mortgage if you are self employed?
A mortgage broker may be able to get you a bigger mortgage than you would have got yourself, if you were self employed.
Lenders treat self-employed income differently, so it is always wise to go to the correct lender, depending on how your self-employed income is made up.
For instance, if you are trading through a limited company, being a director and owner, some lenders will limit the income they use to just the director’s remuneration plus dividends.
This could cause a problem if you leave most of your money in the company for a later date.
For instance, if your company made £100,000 after tax and you paid yourself £12,000, along with taking £30,000 in dividends, some lenders would call your income £42,000.
Another lender that underwrites an application based on the director’s remuneration plus their share of the net profit after corporation tax would call the same income, £112,000.
This would make a massive difference to your borrowing potential. Even lenders calculate the income for a limited company owned by their share of the net profit before corporation tax.
Depending on the lender’s income multiple, this would boost their borrowing figure even more.
Many self-employed lenders use an average of the last two years’ figures when calculating an applicant’s income.
There are, however, lenders that work off the latest year’s figures which can make a big difference if there has been a jump in income in the most recent year.
It is a mortgage broker’s job to know how the different lenders calculate income and to find the lender that can offer you the most money, should you need it.
Due to the number of mortgage lenders in the market, it is unlikely that if you pick a lender without knowing how they all work, you are approaching the one that will lend you the most.
This is an example of where a mortgage broker is likely to be able to get you a bigger mortgage due to their knowledge.
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Can mortgage brokers get you a bigger mortgage when paying off debts?
When lenders assess how much they can lend to you, they consider income and outgoings.
This means they look at your level of debts and the amount you pay per month for each commitment.
Mortgage brokers have the tools to calculate loan capacities with each lender.
It may be the case that you have a small loan balance (for example, £1,500) that has five months remaining at £300 per month.
With some lenders, clearing this balance in advance may make no difference whatsoever.
However, with another lender, removing this £300 per month commitment may significantly impact what you can now borrow.
Talk to an experienced mortgage adviser explaining your debts and what you could afford to pay off. They may recommend clearing one debt immediately if this would improve your borrowing potential.
Again, this is an example of where a mortgage broker with knowledge about the entire mortgage market, and tools available to them, may be able to get you a bigger mortgage than you would have got yourself.
Can some mortgage brokers get you bigger mortgages when increasing your deposit?
Some lenders will offer different income multiples if you increase your deposit.
For example, this may mean increasing your deposit from 10% to 15% to get a more generous multiple from the lender’s calculator.
This will not make a difference for every lender, but some can lend more when the loan value is lower.
A mortgage broker should know what lenders would lend you more money if your deposit is increased.
If you went to visit an unknown lender, it may be that increasing your deposit with them would not result in additional borrowing.
Talking to an experienced mortgage adviser with access to the whole of the market may result in a bigger mortgage in this situation, as they know the lenders to approach when you have the flexibility of increasing your deposit.
Although a mortgage broker would not necessarily sway over what a lender will give you, they have the knowledge and tools available to determine which lenders to look at.
Everybody’s situation is different, so a small change may not make a difference with one lender, but it could be significant with another.
Self-employed income is an example of lenders coming back with very different maximum loan amounts based on the same income.
A mortgage broker will be able to assess your income and outgoings and research which lenders are most likely to give you the mortgage amount that you need.
Unless you have the same level of mortgage knowledge as the broker themselves, a mortgage broker can likely get you a bigger mortgage than you would have got yourself.
In addition to a bigger mortgage, professional advice is always recommended when you are taking a mortgage.
A bigger loan may not be suitable for you and may put you in financial difficulty due to taking it.
Your mortgage broker can work with you to establish your budget to make sure that you are in a position where you are not borrowing more than what you can afford to pay.
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