Step 1 - Know your figures

This is the absolute 1st step of buying a house - miss it at your peril!

In this article you'll learn:
1 -

How to create a full assessment of your income & expenses in to a budget planner

2 -

How having a car loan can reduce how much a bank will lend you by £38,237.00. 

3 -

How to establish how much each of the banks are prepared to lend you.

4 -

How one bank can lend you £41,863 more than another.

Getting your figures in check:

If you’re looking to buy a new home but haven’t carried out a full assessment of your income and outgoings then you may just be committing ‘Home Buyers Suicide’. 

The days of the banks and building societies using simple income multiples are loooong gone and what’s in their place are far more sophisticated ‘Affordability Calculators’ that look at a complete picture of your finances to make a decision on how much they are going to lend you.

Find out how much you can borrow:

Getting your budget right and your finances in order, before you buy a house, can have a big effect on how much you will be able to borrow.  Commitments such as; credit card debt, car finance or personal loans will lower the size of the mortgage a banks is prepared to lend you.

Complete the next 2-steps and you'll have a pretty accurate idea of what you can borrow...

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Step 1: Complete a budget planner

Complete this simple form with all your income & outgoings and it will tell you what you have left at the end of each month for your new mortgage payments.

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Step 2: The lenders 'Affordability Calculators'

Most of the banks have an affordability calculator that you can use to get an accurate idea of how much they will lend you. For a list of links click the link below.

One lender can offer you more money than another:

Don’t assume that all the banks and building societies will lend you roughly the same, they won’t.  In fact the differences can be VAST.  To illustrate this we have carried out the following comparisons: 

  • Mr & Mrs George
  • 2 x children
  • £45,000 - Combined Income
  • £50,000 deposit available
  • 25 Year mortgage term
  • £300 per month car loan
  • £186,763.00 - Santander
  • £168,500.00 - Nationwide
  • £161,500.00 - Woolwich
  • £144,900.00 - Halifax

*These figures are for illustrative purposes only and not to be taken as an accurate guide to what each of the lenders can offer.

As you can see, there is a £41,863 difference between what Santander and Halifax can lend Mr & Mrs George, based on their affordability calculations - so it’s well worth doing your research! 

What a difference a car loan can make:

It was mentioned earlier in this article that credit commitments, such as a car loan, can have a big impact on what you will be able to borrow.  To highlight just how big an impact, have a look at the following figures:

Scenario 1 (no car loan):

  • Mr & Mrs George
  • 2 x children
  • £45,000 - Combined Income
  • £50,000 deposit available
  • No credit commitments
  • *£225,000 - Max loan available

Scenario 2 (with car loan):

  • Mr & Mrs George
  • 2 x children
  • £45,000 - Combined Income
  • £50,000 deposit available
  • £300 per month car loan
  • *£186,763 - Max loan available

The above illustrates that a £300 per month car loan reduces the amount that Mr & Mrs George can borrow by £38,237.00.  That’s a 17% drop!!!

Getting your budget wrong (or not doing a budget at all) can mean you’re not able to buy the home you and your partner have fallen in love with.  This can be deflating and wastes a whole lot of time, right at the stage when you should be most excited about your first purchase or moving home. 

Get £41,863 more than you thought you could

Learn how you can a larger mortgage then you though was available

Read our guide on mortgage protection

Get yourself up-to-speed with a full guide to protecting your mortgage

Help!...I've had credit problems

If you've had credit problems in the past - fear not, you have options

How to get your mortgage offer in 10-days

Follow these simple steps & get your mortgage offer in record time

The Essential Mortgage Checklist

Here's a list of EVERYTHING you're going to need for your mortgage application

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Would you like to speak to John about your mortgage?

When it comes to mortgages John knows his eggs.  His job is to review your individual needs and recommend the mortgage that going to cost you least over the coming years.

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How to get your mortgage offered in 14-days!

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Broker vs Direct
Find out who can save you the most money

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The Price Cruncher
Get your new home for less money

The 'Essential 6-Step Guide' to buying your first home:
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Step 1 - Know your figures

If you don't know your figures, then you won't know how much you can afford.
Do you sums now and save time later

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Step 2 - Get your credit file

Ensuring your have a clean credit file is a must when your buying your first home.
Get your free file now

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Step 3 - Choose the right mortgage

Finding the right mortgage can be a minefield of options.
How to find your perfect mortgage

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Step 4 -Find a great solicitor

There's a HUGE difference between a good one & a bad one.
How to choose the RIGHT one

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Step 5 - Make an offer

Put yourself in the best buying position & blow the competition out of the water.
How to get your house...Fast

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Step 6 - From offer to completion

Keep control of your home purchase & make sure you're in the know.
Get informed - Take control