When on the search for good mortgage advice, the most important consideration is whether it is affordable or not. This aspect is so important because it will determine, to a great extent, the future of your home. Keep in mind that you will have to make continuous payments or you run the risk of losing your house. That fact alone highlights the seriousness of this decision.
However, defining what an affordable mortgage is turns out to be less straightforward than you might think. Since the FSA does not publish an official definition, it falls to lenders to define it themselves according to their own criteria. No matter what definitions you run into, never lose sight of the fact that you know where you stand better than anyone else. This puts you in the best position to decide what you can afford. One person may be able to swing a certain amount while someone with the exact same income will not. Your income is only one factor among many: you also have to factor in your expenditure profile, disposable income and money management skills.
Two people may earn the same amount, lets say 30,000 per year. But one person may save money at the end of each month and have a healthy pool of savings. The other person may rarely if ever have any money left at the end of the month. This type of person needs to make a careful assessment about what is affordable. It is easy to convince yourself that you "could"cut back. But to be prudent, you "should" cut back before you take out a new mortgage, for a period of at least 12 months and save some money. If you are unable to be disciplined and cut back, you should ask yourself whether you "really" can afford to take on such a serious financial commitment.
So how do you calculate affordability? You need to make an analysis of your income and expenditure over a period of time of at least 6 months. Make a list of your incomes and expenditure, and categorize the list. Some expenditures will be "necessary" such as food, clothing etc... Others will be existing credit commitments which must be met such as loans or credit cards. You may also have expenditures which are social, but not strictly "necessary". The difference between your income and your necessary expenditures is classed as your "disposable income". This is the money that you have each month that you can choose to spend - and which can be used to pay your new mortgage and household costs. You need to consider how much of this disposable income you could comfortably commit to a new mortgage.
Make sure you show everything to your mortgage advisor when you meet. If you hide things, these professionals will not be able to really give you the mortgage advice that you need. You might find yourself with more resources later on, but for the present, the advisor needs to know your true situation to help you succeed and build the future you want.
However, defining what an affordable mortgage is turns out to be less straightforward than you might think. Since the FSA does not publish an official definition, it falls to lenders to define it themselves according to their own criteria. No matter what definitions you run into, never lose sight of the fact that you know where you stand better than anyone else. This puts you in the best position to decide what you can afford. One person may be able to swing a certain amount while someone with the exact same income will not. Your income is only one factor among many: you also have to factor in your expenditure profile, disposable income and money management skills.
Two people may earn the same amount, lets say 30,000 per year. But one person may save money at the end of each month and have a healthy pool of savings. The other person may rarely if ever have any money left at the end of the month. This type of person needs to make a careful assessment about what is affordable. It is easy to convince yourself that you "could"cut back. But to be prudent, you "should" cut back before you take out a new mortgage, for a period of at least 12 months and save some money. If you are unable to be disciplined and cut back, you should ask yourself whether you "really" can afford to take on such a serious financial commitment.
So how do you calculate affordability? You need to make an analysis of your income and expenditure over a period of time of at least 6 months. Make a list of your incomes and expenditure, and categorize the list. Some expenditures will be "necessary" such as food, clothing etc... Others will be existing credit commitments which must be met such as loans or credit cards. You may also have expenditures which are social, but not strictly "necessary". The difference between your income and your necessary expenditures is classed as your "disposable income". This is the money that you have each month that you can choose to spend - and which can be used to pay your new mortgage and household costs. You need to consider how much of this disposable income you could comfortably commit to a new mortgage.
Make sure you show everything to your mortgage advisor when you meet. If you hide things, these professionals will not be able to really give you the mortgage advice that you need. You might find yourself with more resources later on, but for the present, the advisor needs to know your true situation to help you succeed and build the future you want.
About the Author:
I you are searching for a qualified mortgage broker, then Economicfinancialsolutions.co.uk will help you in finding the best broker to get the mortgage you desire.
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