Despite a decision by the Bank of England (BoE) to scrap a mortgage affordability test this month, other affordability checks remain in place that buyers should be aware of when assessing how much they can borrow.

This month the Bank of England scrapped a mortgage affordability test that required lenders to stress test whether borrowers could afford a 3% rise in interest rates.

The changes have prompted some customers to question whether it might be easier to secure a loan. However, other key affordability checks remain in place that buyers should bear in mind when assessing how much they can afford to borrow.

Tim Woods, Knight Frank Finance Partner and mortgage expert explains, “When lending decisions were made previously, they would calculate the interest rate plus 3% and they would use that as the affordability model. But underlying that was a rule that capped borrowing typically at 4.5 times your income, which most lenders adopted and still have in place.”

He adds, “Even though lenders can now drop the 3% increase, the decision by the BoE to increase the base rate rise to 1.75% in August means half of that 3% has already been wiped out.

“Behind the scenes, lenders also factor in certain assumptions around the growing pressures around cost of living within their affordability models, which has wiped out the other half. So even though they’re no longer using an assumed 3% increase, we’ve seen no change to lending levels as a result of this.”

For some, this could mean they are unable to borrow as much as they hoped. “This is where a whole of market broker can help,” says Tim. “They are able to explore the market and approach multiple lenders to find the best deals out there, so it’s worth reaching out and seeing what options are available for you.”

If you’re interested in understanding how these changes might affect you, please do get in touch with our expert team who would be delighted to help. We have access to all the major lenders in the market, and can help find the most cost-effective and suitable mortgage for you.