The Initial Consultation and Affordability Assessment

  Before granting first time buyer mortgages, each licensed money lender conducts an initial consultation. Studying the clients is the first step to knowing their circumstances. This way, the mortgage broker collects primary data about their clients to research the most suitable lending solutions. Moreover, this consultation can be conducted over the phone or via video and is usually free of charge.  Next, the financial institutions will use an affordability assessment to decide whether or not to grant you a mortgage. Besides credit checks and a high deposit, affordability also plays a crucial role in establishing the sum you receive. So what is an affordability assessment? Simply put, the lenders calculate the extra cash resulting from the difference between your income and monthly expenses. To simplify things, you should decide on a property before this stage so that they can estimate a maximum borrowing limit. For employees, the income can be their salary plus bonuses, commissions, and overtime, while for those self-employed, the income is their net profit. The expenses include utility bills, rent, food, credit cards, and personal loans.   However, the equation can get more complicated, as different lenders might enforce stricter lending criteria. For example, they might want to know how much credit you have available and how you use it. In addition, they can look into your repayment history and even simulate if you can afford to pay increased mortgage rates. Moreover, some lenders might offer you lower borrowing limits than others. As a result, the affordability assessment can be a double-edged sword and a tool that helps you find the most suitable lender.