Why do different mortgage lenders lend different amounts? Your Property Financial
Автор: Your Property Financial
Загружено: 2025-09-02
Просмотров: 2993
Different mortgage lenders can offer different loan amounts for the same borrower because they have their own unique criteria and methods for calculating risk and affordability. While they all consider similar core factors, they weigh them differently.
Here are the key reasons why lending amounts vary:
Affordability Assessment and Income Multiples:
Lender-Specific Calculations: Every lender has its own affordability calculator. They will assess your income, but what they consider "income" can differ. For example, one lender might accept a higher percentage of bonuses or overtime than another.
Income Multiples: A common starting point for lenders is to use a loan-to-income (LTI) ratio, multiplying your gross annual income by a certain factor. While the industry average is often 4 to 4.5 times income, some lenders may offer up to 5 or even 6 times your salary, depending on your financial profile and the overall economic climate.
Stress Testing: Lenders are required to "stress test" your ability to repay the mortgage. This means they calculate whether you could still afford your monthly payments if interest rates were to rise. The specific rate they use for this test can vary, which in turn affects the maximum amount they are willing to lend.
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