Home Buyers Guide

Chapter 6: Choosing the Right Mortgage

Step 7: Picking a lender

The next thing to do is to rule out those lenders which are ‘non-runners’ and create a shortlist of those lenders who you might apply to.

There are two main factors which can make a lender a ‘non-runner’.

• The deposit they require you to have.

• The maximum mortgage approval they will offer.

Deposit:

So for example, if you are a first time buyer with only a small deposit, a lender which requires you to have a 20%
deposit will probably be a non-runner.

In this case we’d rule out all those who require bigger deposits and consider those who offer 90% or 92% mortgages.

Maximum Mortgage Amount:

Each Lender has different criteria (or rules) which they use to calculate how big a mortgage they will offer.

Lenders will look at your income, how long you’ve been in your job, your credit history, current loan payments and commitments (among other things) to work out your approval amount.

The good news is that if one lender falls a little short, it doesn’t mean that all lenders will – because the rules they use vary from one lender to the next.

For example, some lenders will only take a small portion of your overtime or bonus into account, whereas others may take most or all of it into account.

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