As a first time, buyer, or next time buyer you want to find out:

“what mortgage can I afford?”

“what mortgage can I get?”

or “what mortgage rate will I get?”

You might be trying to find out how mortgages are calculated or how your mortgage payments will be calculated.

Maybe you’re having questions about why mortgage applications get rejected or why you might need mortgage insurance?

Many of these questions seem simple, but can in reality be a little bit complex because the answers change depending on the lender you’re approaching.

Mortgage rates are live and can change from week to week, sometimes even from one day to the next, depending on what each lender is offering as a product, the same lender may change their rates overnight to reduce the rate and potentially increase a fee or to offer cashback to encourage first-time buyers to use them as a lender.

When you want to know, as a first time buyer, which mortgage you can afford, again it isn’t a simple question of a set amount. It depends on the lenders as the difference between what one mortgage lender can give you and another, could differ by up to £20,000 or £30,000, sometimes even more.

The reason for this is criteria. Lender criteria is the standard on which the decision about your mortgage is made and every lender has different criteria.

Here are a couple of examples:

Overtime – Example lender 1 includes 100% of overtime and basis. The amount of overtime is calculated by reviewing the last three months payslips, averaged, then multiplying that figure to give an annual income. Example lender 2 only uses 40% of the annualised figure, and they calculate this based on the P60 figure less your annual basic salary as it currently stands. This can create very different income figures and therefore different lending amounts.

Contractors –  contractors often work on a weekly or daily rate however they must also submit a tax return to HMRC as they are responsible in many circumstances for paying their own tax and NI contributions. They may also have their own limited company in which they make their tax payments to HMRC. Example lender 1 will review the contract amounts and base lending decisions on the daily rate times by a set number of days and weeks in the year. Example lender 2 will review the personal tax calculations submitted through to HMRC and use this taxable net figure as the income for mortgage assessment. These two figures can again give very different mortgage lending figures. If you are new to contracting but have been in the industry for a long time, Example lender 1 will accept your contract from the moment it is issued whilst Example lender 2 may require up to a two-year track record of being able to work consistently as a contractor.

It’s not just your income that is subject to lender criteria. Outgoings are also subject to criteria.

As an example of this, if you have a credit card that you are planning to clear before completion, Example lender 2  will still include this credit card as remaining outstanding as they view that you may still run this credit card back to the current amount. But Example lender 3 will disregard your payments towards the credit card as you have told them that it will be settled before completion.

Your credit file is another area where lender criteria becomes particularly important.

You could have a near perfect credit rating and yet the bank you regularly use will not accept a mortgage application from you to the level that you need because of a small late payment, a historical default from years ago or even simply using a credit card to close to the balance limit.

Sometimes it’s not clear why your bank will not accept you and they simply say that it’s down to their own internal credit scoring.

There are other lenders that are much more generous in the way they view credit and they can take a more manual conversation around, perhaps a dispute with the gas and electricity company or a missed payment where a direct debit mandate had not been put in place correctly.

Some lenders specifically help those who had life events such as divorce or bereavement that could’ve seriously impacted their credit so even if you view your credit report and there is a more serious issue, lenders criteria can step in to help you by matching your situation with the right mortgage lender – provided your mortgage advisor understands and knows the rights lenders to access for you.

As an experienced specialist mortgage advisor, a major part of my role in helping you is to ask the right questions and understand your situation fully. This way I can correctly navigate and guide you through the lenders criteria to assist you in getting the best solution.

As a first time buyer learning the basics about a mortgage can be overwhelming with the level of information that is available, even when you’ve always had a good grasp at finances.

With lenders criteria being so key it is important to have an adviser with the right experience and industry connections that have the knowledge required to get you the best mortgage.

Don’t hesitate to reach out today to have your initial call and find out which criteria will be important for your personal tailored solution.