If you are thinking about purchasing a property it is first important to know how much you can afford to borrow. Mortgage Lenders traditionally used income multiples to work out this amount.
If an applicant was earning 30,000 a year the lender would calculate that they could comfortably afford to borrow 3.5 x their income which is 105,000. If approached with a joint application, lenders would add the two incomes together say 30,000 and 16,000; this would make their total income 46,000. To work out how much the couple could borrow they would then multiply this figure by 2.5, this would make a total of 115,000.
However these affordability practices have now become outdated with house price inflation and low interest rates, these factors have made the cost of borrowing a mortgage cheaper.
Why The Practice Has Changed?
In the last few years mortgage lenders have started to offer larger amounts, they have increased the income multiples to for example 4 or 5 times salary. Since the property house price boom, this is often required to give buyers a chance of meeting market prices and seller expectations.
Repossession of property is currently at a...
To view and download this full PLR article, you must be logged in. Registration is completely free. Once you create your account, you will be able to browse, search & downlod from our PLR articles database of over "1,57,897+" on 1,000's of niches and 200+ categories without paying a penny. Click here to signup...
