So how much can you borrow? This is becoming increasingly difficult to fathom as the new affordability calculations now used by more than 50% of all mortgage lenders is much more difficult to work out.
In the old days it was easy with the old style multiple of income formula.
The uncertainty in turn creates a problem for brokers. Every time they put in an application, it leaves a credit ‘footprint’ on the home-buyer's file.
If the applicant is turned down for the loan, or the lender is not prepared to advance enough to buy the property, that footprint will be seen by subsequent lenders who may interpret it as a negative indicator.
Would you like to know your borrowing power?
The Association of Mortgage Intermediaries (AMI) has just launched a very useful fact sheet, Credit Searches & Footprints, with the aim of informing brokers of the different types of credit searches used by mortgage lenders, and how they might affect a customer’s ability to obtain credit in future.
The fact sheet covers how credit searches work including what information is held by the credit reference agencies and what it is used for. It also highlights the differences between 'soft' and 'hard' footprints left on a customer's credit file by lenders, the impact both could have, and the visibility of each type of footprint to those who conduct further searches.
Other areas under review include a look at the Financial Services Authority's requirements with regard to repeated credit searches, and information on how intermediaries should inform their customers about this issue. AMI also answers what it anticipates will be frequently asked questions.
As more and more lenders move towards online decisions and sophisticated product offerings for those with impaired credit records, credit searches are now often carried out earlier in the mortgage process.
Mortgage brokers need to be aware when a credit search will be carried out and which type of search the lender will undertake before requesting a decision-in-principle or submitting a client's application for a particular mortgage scheme.’
The fact sheet provides AMI members with information on the impact a 'soft' or 'hard' footprint will have on a customer's credit report, especially multiple footprints made in a short space of time.
At mortgage-map our brokers take great care not to have an adverse affect on our clients credit footprint.
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CREDIT FOOTPRINT