Income Stretcher Mortgages explained and available help from Shire Direct...
Income Stretchers can be used effectively to help borrowers acquire the mortgage funding they need to complete their mortgage transaction.
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Below we explore Income Stretcher Mortgages in more detail, together with how they work, what mortgage lenders will take into account, maximum borrowing amounts and the importance of affordability. We also look at how Shire Direct can help with an Income Stretcher!
Table of Contents:
Income Stretchers: An introduction
Income Stretchers can be used effectively to help the borrower obtain the mortgage funding they seek in order to enable them to complete their mortgage transaction.
The fact is that not all mortgage lenders approach the amount they are prepared to advance by the same yardstick.
For example, Building Societies have traditionally calculated affordability based on "income multipliers", and since the 1960's the conventional method for most lenders would be to apply income multipliers of 3+1 to a couple requiring mortgage funding. Thus the level of funding the lender considered affordable would be based on 3x the main earner's basic salary, plus 1x earnings from the co-applicant.
Although this calculation of affordability is still prevalent with traditional lenders, they can be unfair and to an extent discriminatory on the bias given to one earner over the other.
Will some lenders take into account overtime, commission, or bonus payments?
Yes, nowadays there are lenders that will include all your income into the multipliers to calculate the amount you can borrow on mortgage, as opposed to just your salary. Nowadays, the income structure of many in employment is structured not only around a basic salary, but is increasingly reliant on some form of performance level, either individually or corporately.
So, no longer are borrowers restricted to 3x their salary alone. A new breed of banks and centralised lenders that specialise in the provision of mortgage products, understand that the old formula of income multipliers don't do justice to modern-day circumstances. These new lenders give as much weighting to overtime, commission and bonus payments, as they will basic salaries. Furthermore, your partner's income will generally be accepted as equal importance towards the affordability factors.
What is the maximum amount I can borrow on my income?
It's important that as a borrower you accept that the answer should be "No more than you can comfortably afford"!
So as we've seen, lenders apply a variety of sophisticated methods and formulae in order to check the affordability of mortgage payments, and one of the more progressive innovations in recent years has been the introduction assessing total debt to gross income, usually to a maximum of 50%. This means that if borrowers have joint gross income of £3000.00 per month, then the lender may allow up to £1,500 to provide for all the borrowers financial commitments.
It really is important, especially if you are buying a property for the first-time that you don't financially over-commit yourself. In the excitement of purchasing a new property, there can be a danger of over committing your financial budget.
Here at Shire Direct, we will carefully work out your budgetary commitments, now and into the future, as far as is possible, and only recommend products that are likely to be affordable. But by the same token, we'll also explore the best products to provide you with the funding you require, provided it's within your budget and affordability!
I've heard that up to 7x income can be arranged on mortgage. Is that true?
Well, sort of!
There are certain instances where borrowers assessed mortgage funding based on a Gross Debt to Income basis, can convert to income multipliers as high as 7x income. However, it should be remembered that such large multipliers will generally only apply to those applicants having higher joint incomes, especially where commission or bonus payments play a large part of their earnings.
Could I borrow 5.5x my income?
Yes, there are lenders that will consider conventional income multipliers at 5.5x or even more. Some mortgage plans are available, especially on longer-term fixed rate products, where the customer will benefit from a larger degree of repayment stability during the early part of their loan.
Can Shire Direct help if I require an Income Stretcher?
We'll certainly try!
As you are no doubt well aware, arranging a mortgage will probably be the largest personal financial transaction you will ever enter into. And so the first thing we'll do is get to understand your circumstances and requirements. Advice and service always come first at Shire Direct. We'll carefully assess your situation and provide you with the most appropriate and affordable solution.
If you are a borrower that may need an income stretcher beyond conventional income multipliers in order to achieve the required level of funding, remember we can often consider higher income multipliers. However, it really is very important that your mortgage commitment is not only affordable, but also sustainable.
So, if you've been turned-down for the mortgage you require, you should talk to Shire Direct. Our advisors are all professionally qualified, and we'll make sure your circumstances, aspirations and needs are all fully explored, and we'll then work with you to provide the most suitable solution for you! Naturally we would be delighted to discuss your requirements with you.
Our Freephone lines on 08000 282 281 are open seven-days a week until 10.00pm, and we assure you of a friendly and unstuffy personal and professional service, whatever your requirements. We feel we have the expertise and resources to come up with just the right solution for you!
We assure you of a warm welcome and a rapid in-principle decision, backed up with a comprehensive, personal and professional service, so why not give us a call now, or why not enquire online - whatever you decide, we think you'll be glad you did!
Well that wraps up our look at Income Stretcher Mortgages, we hope you found it useful and that we've managed to answer any initial questions you may have had. Remember, we're just a free telephone call or couple of mouse clicks away and will be delighted to help in any way we can!
The overall cost for comparison is 9.8% APR.
The actual rate available will depend upon your circumstances. Ask for a personalised illustration. APR variable and based on a usual case. Most customers are likely to receive a lower rate or the same rate as our overall cost for comparison rate - learn more about APR.
There are no upfront broker fees.
However, a fee may be charged on successful completion. An indication is that on conforming cases (straightforward applications with no or minimal adverse credit) a fee may be charged of up to 1% of the amount advanced, typically £795 and will depend on your circumstances.
For non-conforming cases (where case research and processing may be more complex due to adverse credit or unusual circumstances), a fee may be charged of up to 3% of the amount advanced, typically £1,995.
THINK CAREFULLY BEFORE
SECURING OTHER DEBTS AGAINST YOUR HOME.
YOUR HOME MAY BE REPOSSESSED
IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT.
Adding existing debt to your mortgage will increase the repayment term and overall cost.
Are you worried and becoming stressed because you are having problems getting a mortgage or remortgage? Worry and stress no more! Here at Shire Direct we provide tailor made mortgage solutions to suit you, and can usually help with all kinds of circumstances including...
Remember, we're here to help, and would love to hear from you!
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Shire Direct and Shire Direct Mortgages are trading styles of Shire Processing Centre Limited which is
Authorised and regulated by the Financial Services Authority in respect of regulated mortgage products and general insurances.
Registered No: 302389. Commercial funding and Secured Loans are not regulated by the FSA.
Licensed Credit Brokers. Consumer Credit Licence Number: 349999.
Shire Processing Centre Limited is registered under the provisions of the Data Protection Act by the Information Commissioners Office: Registration No: Z6795249. Registered in England & Wales. Company number: 2732202. Telephone calls may be recorded for training, monitoring and security purposes. All applicants must be aged 18-years or over.