In my opinion, the most important aspect of any Mortgage Capacity Report is the consideration of affordable borrowing. In many cases maximum borrowing, which is the amount of mortgage borrowing mortgage lenders consider as suitable for an individual, is often very different to that same individual’s affordable borrowing. This is due the difference between essential and lifestyle expenditure.

Essential expenditure, which is made up of a selection of items selected by mortgage lenders, usually includes the following:

• Committed expenditure - such as loans, credit cards, maintenance and repayment for Interest Only mortgages.
• Basic essential expenditure - such as food, gas, electricity, Council Tax and phone.
• Basic quality of living expenditure - such as clothing, household goods, childcare and basic recreation.

Lifestyle expenditure consists of the above along with all other expenses, such as children’s swimming and / or sports lessons, holiday costs, gym membership and Netflix subscription to name but a few.

Therefore, it is important to consider whether maximum borrowing is affordable based on actual lifestyle expenditure. This will ensure that a mortgage is affordable whilst protecting the expenses many of use deem as essential, not those dictated by mortgage lenders.

If you would like to find out more about our reports and access free support, please contact us via our website or call our Mortgage Capacity Expert, Natasha Palmer, free on 0800 6342 111.