HOMEBUYERS will find it tougher to get a mortgage as the living costs soars, but insider tricks will help you obtain the loan you would like.
Greg Cunnington from large financial company LDN Finance says rising energy bills, council tax and travel costs means lenders are now slashing the total amount they'll allow you to borrow.
Banks use official data on households' outgoings to sort out just how much a future homebuyer are able to afford to borrow and repay.
As living costs rise, banks typically lower the total amount they will lend.
Greg says: “If a power bill rises from 100 to 300, lenders know there's less cash to play around with each month. It has a knock-on impact on just how much people can borrow.”
In a double whammy, interest rates are also going up, which increases repayment costs to further curb mortgage sizes for borrowers.
But Greg says insider tricks can help you borrow more to make sure you obtain the home you would like.
Extend your mortgage term
When you take out a home loan, you accept have it for any certain period of time.
Typically this really is around 25 years, but it could be longer or shorter (and you can change it out later down the road)
So one of the ways homebuyers can make monthly obligations more affordable is by opting for a longer-mortgage term, based on Greg.
He says: “The longer the word, the low the monthly payment. We're visiting a large amount of clients asking us to proceed on a maximum term basis. It really helps first-time buyers.
“You have to be carrying out a job where you posess zero legal requirement to retire early, but anyone office-based shouldn't have trouble.”
Many lenders will allow loans to operate as much as the age of 75, with a few offering terms as long as 4 decades.
But borrowers have to be conscious that increasing the term means you'll pay more interest on the mortgage in the long run.
If you'd a 150,000 mortgage at 3.5% for Twenty five years, your repayments could be 751. And also over the word of the mortgage, factoring in charges, you'd repay 225,281.
If you'd the same mortgage on the 40 year term, your monthly repayments would fall to 581, but the amount you'd repay jumps to 278.921.
Fix for longer
Choosing a longer term fixed-rate is another method of bumping up loan sizes if you're comfortable to be tied in.
Greg says: “There are a handful of lenders where one can borrow more if you take a fixed rate of 5 years or longer.
“In the present environment, people should also lock in longer as they are concerned about rate rises – it's a win win.”
Having a fixed-rate mortgage is ideal for anyone who really wants to know exactly how much they'll pay each month.
They also shield you from rate of interest rises. If you're on the variable or tracker mortgage, then every time the financial institution of England hikes rates of interest, your repayments are likely to go up too.
But those found on fixed-rate mortgages have kept in their rate for a set period, so might be protected from these hikes.
Consider an interest-only mortgage
Buyers who wish to borrow many keep repayments low could also find interest-only mortgages are a choice if they have a deposit or equity of at least 25%, according to Greg.
On these deals, borrowers pay only back the eye on the mortgage each month so bills are lower.
Greg says: “There are lenders that allow mortgages to be on an interest-only basis for a period of time while borrowers feel the pinch, once they have a suitable repayment strategy in position.”
But you'll need to have a plan in position based on how you'll repay all of those other loan in the future.
These mortgages are usually only suitable for people who have a lot of money in savings or investments, so can afford to repay the total amount of their loan.
Shop around
Different mortgage providers have different lending criteria, so some might let you borrow a lot more than others.
That means it's important to look around the entire sell to maximise what you could get.
Greg says: “Different lenders specialise in different client scenarios. You want to make certain you're obtaining the borrowing figures of all the lender because it is really so vastly different.”
For example, aspiring clients who work overtime, receive bonuses or get commission may find lenders take just 50% of the additional income into consideration, but others will consider everything.
A good large financial company might help borrowers compare lenders to obtain the biggest loan based on their particular circumstances.
Greg says: “Brokers have access to the decision makers in the lenders, they are able to get things agreed that clients can't do themselves.”
Advisers also provide relationships with little-known lenders which will accept applicants when big named banks won't.
Greg says: “There are specialist lenders who are able to assess clients on their own individual affordability and do not work off statistics, this is a really useful area of the market for those people who are not receiving what they need in the high-street names.”
Tidy your finances
Getting your finances in shape can help you borrow more too.
Home hunters who aren't in a rush to purchase and can wait while they save a bigger deposit could find it is worth it to ultimately get a bigger mortgage.
Greg says: “The bigger a deposit you have, the low interest rate you get – so lenders will lend more.”
At the same time frame, cleaning up any damaged credit ratings is another check for individuals who anticipate buying within the coming few years.
Greg adds: “With a clean credit score, you have access to lenders which will offer the most borrowing.”
Each week, we make contact with a first-time buyer included in our My First Home series, including this person who quit the job she loved in order to save more income for any deposit.
Elsewhere, one property expert reveals the 4 easy steps to getting rid of mould for good.