Why working with a broker can really benefit you as banks tighten their lending criteria - Oundle & Stamford


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Why working with a broker can really benefit you as banks tighten their lending criteria

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In recent weeks, you can’t have missed headlines about the cost of living crisis in the UK. From litres of petrol to loaves of bread, the price of many goods and services has noticeably increased in the past few months.

According to data from the Office for National Statistics (ONS), the Consumer Price Index rose to 9% in the year to April 2022. This represents the biggest increase in the cost of living for more than 40 years.

Due to the recent rise in inflation, many banks and building societies have tightened their lending criteria for mortgages. As you might imagine, this can make it difficult for prospective home buyers to secure the loan they need.

With this in mind, if you’re hoping to buy a property in the near future, or you might want to switch your mortgage, read on to find out why working with a broker can really benefit you.

The rising cost of living means that many households are having to tighten their belts

In recent months, there has been a noticeable spike in the cost of living as the price of many goods and services has increased. While there are several reasons for why this happened, one major contributing factor is the disruption to international trade caused by the coronavirus pandemic.

Essentially, due to the national lockdowns across the globe, the production of many consumer goods fell in 2020 and 2021. This led to a shortage of supply, though it wasn’t immediately noticed as many households had to reduce their spending during this time.

However, now that economies across the world are starting to open up again, there has been a surge in demand for the limited goods available. As you might imagine, this has caused prices to surge.

On top of this, the war in Ukraine has also affected global supply chains and increased the cost of goods. Not only was the country a major exporter of food before the war, but the sanctions on Russian gas and oil have caused energy and fuel prices to spike.

Due to the rising cost of essentials, many Brits now have less money to spend on other things. According to the Guardian, the cost of living crisis represents the biggest fall in disposable income for three decades.

Due to this, many banks have tightened their lending criteria, in order to protect themselves from bad debt. While this may be an understandable precaution, it could make it more difficult to secure a mortgage if you’re hoping to buy a home in the near future.

Many banks are tightening their lending criteria, making it harder to get a mortgage

Since the financial crisis of 2008, if you want to apply for a mortgage, you’ll have to undergo affordability checks.

Typically, this will involve providing your lender with information about all your significant outgoings. This may include your current rent or mortgage, monthly bills for childcare, car repayments, or any other ongoing expenses.

On top of this data, some lenders also rely on average household spending figures from the ONS when assessing whether an applicant can afford their monthly payments.

As the cost of living rises, and the increase in National Insurance contributions starts to bite, you may have less disposable income than you did before. Due to this, you may not be able to borrow as much from your lender, which can make it difficult to afford the home you want.

According to the Guardian, Santander is already updating its affordability models and other large lenders, such as HSBC, Barclays, and NatWest, are likely to follow suit in the near future.

Whether you’re taking your first step onto the property ladder, or moving to a larger home, this could be a major problem. If you want to improve your chances of securing a mortgage, working with a broker can really help you.

A broker can scour the market on your behalf to find the mortgage that’s right for you

Moving to a new home is a major life milestone and there can often be a lot to think about during the process. Of course, before you start worrying about surveys and solicitors, you need to secure a mortgage, and this can often be the tricky bit.

If you want to boost your chances of getting a loan, working with a broker can be very useful. For a start, they can help you to assemble all the documents you’ll need when applying for a mortgage, taking a large amount of hassle out of the process.

Furthermore, their in-depth knowledge of the market means that a broker can more easily find a lender who’s willing to consider your application. Not only does this make it more likely that you’ll be able to secure a mortgage, but they can make the process much faster and easier than if you did it yourself.

Finally, brokers typically have access to a wider range of mortgage deals than the general public. This means that they are more likely to find one that’s right for your needs, giving you greater peace of mind.

If you want to be able to buy a home with confidence, working with a professional can help you to make the process faster and as hassle-free as possible.

Get in touch

If you want to maximise your chances of securing a mortgage, we can help. Please get in touch to find out more. Email info@oundleandstamfordmortgages.com or call us on 01832 272653.

Please note:

Your home may be repossessed if you do not keep up repayments on a mortgage or other loans secured on it.