Mortgage brokers - we need to talk affordability

"Affordability has always been a key consideration in the advice process. You are effectively looking for the lowest cost lender that will agree to the required mortgage and loan amount for any given client. What tools such as Affordability Brain have done is started to allow brokers to see a much wider view of the market than previously. Before these tools existed, a broker would have to go to each individual lender's website and run the client's details through that lender's affordability model, a very time consuming process. Many brokers would learn over the years whose calculators were the more generous in given situations, saving time by going to those lenders first where affordability was tight. However this created an issue in that some lenders that were less well known to the broker may have actually done the deal and at a better rate, but were overlooked. Affordability tools have levelled that playing field and, for those lenders signed up to the systems, allow brokers to see these smaller, less well known lenders and then use them. "With all that being said these tools are, as always, a guide to help brokers, and they are far from infallible. I had a case the other day where Leeds Building Society came up on Affordability Brain as lending over £200,000 to my client. The reality on Leeds' own calculator was they wouldn't even lend £60,000. Like all the tools we use, they are a great way of filtering down the market from 50+ lenders to a manageable few that we can then focus our research on for our clients."

"There is a vast difference in the way lenders assess affordability, which can sometimes be the difference of hundreds of thousands of pounds on the maximum borrowing amount. Checking affordability is the first thing we do at Langley House as it is often the biggest obstacle to overcome. For whole of market brokers like us it would be unrealistic to run every lender's calculator individually for each client we speak to but I would consider it lazy if only one lender was considered. I am aware that in some brokers it is common practice to run one calculator with Halifax to work out affordability for prospective buyers, but we will always run multiple calculators to give buyers a true reflection of what their options are. There are also useful platforms which will run multiple calculators at once, but these should only be used as an indication to then run the full calculator, as there are often inaccuracies."

"Affordability is key to issuing any mortgage advice. As brokers, we have a duty of care to ensure our clients can afford their mortgage. It's made harder with each lender looking at affordability differently and having widely different results when it comes to people's incomes. The self employed tend to feel the brunt of this. Tools like Affordability Hub take away some of the burden of this giving brokers the opportunity to look at the affordability of multiple lenders at once. Although it's not 100% accurate, it does make life easier as working out affordability can be a hugely time consuming process."

"Affordability should always be one of the first considerations brokers investigate. Once we know what you can borrow from various lenders, we can drill down into LTV and finally into criteria to establish the most appropriate deals and products for a client. From my own perspective, interest rates are not even thought about in my process, which is counter to what a client expects simply because, whatever the rate is on the most appropriate product that you tick all the boxes for, is the rate, and we can't change it. Things are moving so quickly that customers getting hung up on rate chasing often end up with a worse product and experience. The takeaway for consumers is this: stop rate chasing because you heard a TV journalist talking about x deals. Instead, find a great broker you trust with a good solid business, and then listen to what they say."

"Affordability is the first thing any broker worth their salt will be looking at alongside criteria, when considering which lender to place a client's mortgage with to ensure it's best for their circumstances. There are several mortgage affordability tools on the market now, all pretty much doing the same thing, providing access to over 100+ lenders. The affordability tools simply allow us to have a brief overview of what the lender is likely to lend a client, but they are never accurate, so my process is still to run any affordability decision directly with a lender to ensure it is 100% accurate to not only give myself the confidence but also give the client confidence that they can borrow what they need to be able to purchase a home."