Mortgage calculator reveals who will lend you the most
Have you ever been confused by the black magic of mortgage brokers who seem to know which lenders will lend less and which will lend more?
Despite all the talk about tighter lending criteria over the past few years and house hunters getting no more than 4.5 times their salary as a home loan, it still seems like lenders have very different approaches – and only mortgage brokers can guess the loan amount we will have.
An online broker has given borrowers well-deserved transparency with a new mortgage calculator that reveals, once the user enters their information, how much different banks and building societies will be willing to lend.
Traditional Mortgage Calculators Perform Simple Multiple Income Calculation
And for a borrower (see case study below) the difference between the most and the least generous turned out to be Â£ 150,000.
Dwell is one of the few recently launched online mortgage brokers, but the only one to offer this particular tool to date. At the moment, it only compares the top 10 mortgage lenders, but it takes two minutes to get a clear idea of ââhow much you could personally borrow from Halifax, NatWest, Barclays, Santander, or Nationwide.
Instead of giving you an estimate like other calculators, Dwell’s system updates in real time using data provided by these 10 lenders.
This includes detailed criteria such as how they calculate self-employment income or whether they will lend if you have a black mark on your credit profile, for example.
Each lender has a different attitude to risk and will lend people very different amounts. This is a huge problem as it can cause people to miss out on the properties they are hoping for.
The tool also sets Dwell apart from two other online brokers – Trussle and Habito – which allow you to apply for a mortgage online and then suggest the best mortgage product to you. At this point, you are then in the hands of a real person who gives you mortgage advice over the phone.
Dwell’s application process is similar to this and includes advice from a human being, but his calculator shows you the range of offers available to you before you apply.
Company CEO Pradeep Raman said: âWhat is often not explained and certainly not clear to many mortgage applicants is that each lender has a different attitude to risk. and will lend people very different amounts.
“This is a huge problem because it can cause people to miss out on the properties they are hoping for.”
Why don’t other calculators work like this?
Mortgage lenders calculated how much you could borrow based on a multiple of your annual income, about four or five times that amount being fairly typical.
But new rules introduced in 2014 banned this simple calculation and required lenders to base the amount you can borrow on what you can “afford” – basically your income minus your expenses each month, which leaves money. place to cover your mortgage repayment.
There is, however, no hard and fast rule of how this calculation is made by lenders – with the result that, according to Dwell, the difference between the highest and the lowest amount can be more than Â£ 150,000.
Dwell’s Mortgage Calculator Reveals How Different Banks Vary Their Mortgage Offerings
The company gives the example of Alex and Fatima, a couple who struggled to determine how much they could borrow to buy their first property because Alex is self-employed and Fatima has a car loan.
Alex pays himself a small salary and dividends of Â£ 16,000 a year while leaving around Â£ 50,000 in the business in pre-tax operating profit over the past three years. Fatima earns Â£ 35,000 a year and pledges to pay Â£ 200 each month for her car finance loan.
Using the calculator, they found out that Barclays Woolwich would lend them a joint mortgage of Â£ 415,000 – a whopping Â£ 188,100 more than the loan RBS is willing to offer the couple at just Â£ 226,900.
That doesn’t mean Barclays will lend the most to everyone – it just looks like Barclays’ lending criteria favors their particular situation.
Where a lender might like clients with full-time salaries and no credit card debt, others are more concerned about your age and how long you want to pay off the mortgage.
The calculator also trumps traditional comparison sites which rank offers based on their low cost and business deal that allows them to pay a commission from the lenders they present.
Also, the offers you get when you search for a mortgage using a price comparison website are just the rates and products advertised – you may find that you don’t qualify at all. .
Steve Tigar, managing director of Money Dashboard – one of This is Money’s top 10 financial apps – used the Dwell service to organize his first mortgage this month after struggling to go somewhere with comparison sites of price.
âI think they’re terrible, a total waste of time,â he says. âThere’s not a minimum of personalization in the search results and you’re usually referred to a single broker who doesn’t bother to follow up once you’ve responded to your request. “
As a result, Steve chose to use Dwell and says he found the service simple and easy to use. You can compare mortgage brokers online here.
A word of warning to those looking to do it all online though – mortgage lenders themselves still haven’t caught up with the technology. with piles of paper.
âDespite the use of some pretty smart technology by Dwell, lenders still need an excessive amount of paperwork,â says Steve. “It was a real headache trying to put together months of bank statements because I haven’t received paper bank statements for over a decade.”
MAKE THE MORTGAGE ONLINE
Steve (34) with wife Lyndsey and daughters Emily and Katie
Steve Tigar recently used Dwell to arrange his mortgage and said the experience was “exceptional”.
My family moved to Edinburgh five years ago and we all fell in love with the city. It was a good time to settle down and buy a family home. We have been saving for a while and had a rough idea of ââwhat we could afford. However, we weren’t sure which lender would be right for us and the Dwell service seemed fascinating.
They promised to find relevant products quickly, which is exactly what we were looking for. And they didn’t charge a fee either, which was appealing given the sky-high transaction costs involved in buying a property.
They combine the latest technology with human expertise to deliver truly exceptional service. There were quite a few moving parts during the transaction so it was great being able to send WhatsApp messages to the Dwell team which were handled very quickly which saved me from having to call or enter a broker’s office.
We knew we could get a bigger mortgage, but we didn’t want to expand too much, so we decided against this and opted to take the Barclays Springboard mortgage instead. It was an attractive rate for a low deposit, allowing us to deploy our savings on renovations.
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