How much money for a mortgage can I borrow?
If you are wondering what the answer to the question of how much money for a mortgage can I borrow is, the very best person to ask is a mortgage broker like the experts at mortgagequote.com. After all, as specialists we should have the knowledge and information on the wide range of factors involved when looking to secure a mortgage. Luckily, you can get some guidance on this topic below, straight from the mouth of a mortgage professional!
Salary is just one part of the mortgage equation
Salary is the first factor considered by mortgage brokers like mortgagequote.com when answering the question: how much money for a mortgage can I borrow?
Traditionally a client’s mortgage needs to be considered in terms of the salary they earn. However, the calculation that mortgage providers perform is more complicated than simply taking this one figure into account.
Indeed, what is important to note here is that the other financial factors that affect the amount of money a client has available each month also play a part in the mortgage process. These factors tend to include things such as credit scores, DTIs, and deposits and are regarded as just as crucial, if not more important by brokers as a client's salary in this case.
Such things are favoured by mortgage brokers for one important reason, they are evidence of a lower client risk level. That is, clients that have low DTIs, high deposits, and better credit scores are more likely to be able to keep up with their mortgage payments and so are regarded as a better loan risk.
Of course, what this also means is when answering the question, how much money for a mortgage can I borrow, the result will be different for different people, depending on how they are rated on the factors mentioned above. The good news is a detailed breakdown of how each factor comes into play can be found, below.
Your debts, as well as your income, will affect your mortgage
Another important factor that mortgage brokers such as mortgagequote.com will use when answering the question of how much money for a mortgage can I borrow, is the client's debt to income ratio. This is something that is also known as a DTI.
DTI is the figure that is left when a client’s debts are taken from their income, and it is a more important figure than their income alone. The reason being that when a client has less to pay out less each month, they will have more leftover for keeping on top of their mortgage payments.
Unfortunately, when it comes to working out a DTI things can be a bit confusing. However, many mortgage clients choose to use a mortgage quote calculator to help them come up with an approximate figure in this case.
The amount of mortgage you get is affected by the size of the deposit you have.
You may already realize this, but the higher the deposit a client is able to make on a property, the more likely it is that a mortgage broker will be able to grant them a loan. This is because the down payment will be taken off the total amount they need to borrow, something that means that the borrower will be more likely to be able to make the payments on what is left.
With that in mind, if you want the reply to the query of How much money for a mortgage can I borrow to be a lot, making sure you save as much as possible for a down payment is vital.
How much money you can borrow for a mortgage could be impacted by current interest rates.
Lastly, it is important to remember that interest is one of the most relevant factors when it comes to answering the question of how much money for a mortgage can I borrow? This is because when rates are lower, the amount the client will have to pay back will also be lower, something that means they will be much more able to meet the monthly payments. Therefore, the client becomes a safer option for the mortgage broker to consider.