How much you can borrow, and who decides

Income, and specifically the income a lender considers reliable. A salary you’ve held for a while is the easy case. Casual work, a second job, overtime, commission and self-employed income all count, but lenders discount them by different amounts and want a longer history. If a good part of what you earn is variable, gather the evidence early, because that’s what slows applications down.

Your deposit does two jobs. It reduces what you have to borrow, and it changes the terms you’re offered. Below a certain share of the price, lenders require mortgage insurance, which protects the lender and not you, and which you pay for. Some also want to see that part of the deposit was saved over time instead of arriving all at once. A gift from family is usually fine, as long as it’s declared and documented.

This is the part people underestimate. A car loan, a personal loan, a study debt, buy now pay later accounts and every credit card you hold all reduce what you can borrow. Credit cards are assessed on the limit, not the balance, so an unused card with a big limit is treated as though it’s already spent. Closing the ones you don’t use is one of the few free ways to move the number.

Lenders ask for your living expenses and then check them against your statements, so the honest figure is the useful one. Children, childcare, school fees, the size of your household and money you send to family all sit inside this calculation. If you support relatives overseas, say so. Leaving it out doesn’t help you, and it shows up anyway.

A lender doesn’t test whether you can pay today’s rate. It adds a buffer on top and tests whether you could still pay if rates rose. That’s why the amount you’re offered comes in under whatever the online calculators promised, and why the answer moves when rates move, even though nothing about you has changed.

The other surprise arrives late. Your lender values the property itself, and if its valuer comes in under the price you agreed, the loan is measured against their figure and not yours. The shortfall is yours to find, which is the plainest reason there is to keep a finance condition in the contract.

• Close the credit cards you don’t use, and lower the limits on the ones you keep.
• Clear or shrink small consumer debts, especially buy now pay later accounts, which lenders do ask about.
• Keep your accounts tidy for a few months. Regular gambling transactions, dishonour fees and overdrawn accounts get read closely.
• Gather payslips, tax returns, and statements for every account and every debt, including the ones you’d rather forget.
• If part of your deposit is a gift, move it into your account early and get a short letter from whoever gave it to you.

Dull work, all of it. A couple of months of being deliberate will move the number more than anything else available to you in that time.

Once you have a range, the search gets simpler and a lot less painful. We stop showing you homes that were never going to clear, and we start telling you which of the ones in range are worth the money. If the range isn’t where you need it yet, we’ll say so, and tell you what we think it takes to get there, instead of walking you through houses you can’t buy.

We’re building the brokerage side of the practice so this conversation can happen at the same table as the rest of it. Until it’s running, we’ll point you to people we’d use ourselves, and sit with you when you meet them, in Hazargi, English or Urdu.