Which lender will lend you the biggest mortgage? The answer may surprise you...
There's so much talk about buyers being squeezed out of the market by lenders tightening criteria, you'd be forgiven for thinking it was impossible to get a mortgage.
There's only one way to find out. Armed with a PC and a desire for the truth, I decided to see how much five of the biggest lenders would offer four typical mortgagors.
I built a profile of my fake borrowers, including income and deposits, and set about hammering the mortgage calculators of the great and the good to find the most generous lender.
Firstly, the riders.
- I did not complete full mortgage applications (I don't want the credit footprint, thank you very much). I used the calculators provided on the lenders' sites. In most cases these specify that the amount shown is the maximum they would be prepared to lend. The actual amount could be less and the lenders did not make mortgage offers.
- I chose my five lenders based on a mixture of the Council of Mortgage Lenders' list of the biggest lenders (by gross lending) in 2007, and my own fickleness - i.e. I took out Northern Rock.
- My top five lenders are Halifax, Nationwide, Abbey, Cheltenham & Gloucester (C&G) and Barclays Woolwich.
- I focused on prime mainstream lending using single and joint applications, first-time buyers and remortgagors, with examples at low and high loan-to-value borrowing.
- All examples were based on a 25-year repayment mortgage.
Who needed what information?
Some of the calculators asked for more information than others.
C&G asked for the most information. It was the only lender, for example, which asked what my loan-to-value was (what proportion of the value of the property I needed to borrow, so it would be 90% if I had a 10% deposit). This can make a big difference to the lending decision so it was surprising the other lenders didn't ask this question.
C&G also asked whether the deal was standard or buy to let, purchase or remortgage, how many applicants there were, how many dependants there were, whether or not I was a first-time buyer, my income and my outgoings.
Abbey asked for income and loan commitments only.
Nationwide asked for mortgage amount and term (but not property value or deposit), salaries, tax status and outgoings.
Halifax asked whether I was a first-time buyer or remortgagor, and if I was an existing Halifax customer or not, whether it was a joint or single application, if I had dependants, income and outgoings (but not property value or the size of my deposit).
Woolwich had two calculators. One asked only for income and the other worked work out monthly repayments, looking at mortgage size and deposit. It highlighted the minimum and maximum borrowings as you adjusted the sliding settings.
All very well, but what would they lend?
Overall, C&G would lend the most of any lender -- at least £48,000 more than any of the others on one particular case: a couple with 40% equity, who have no children and are earning £70,000 in joint income.
In fact, in the biggest difference seen across any of the tables, C&G would lend £104,000 more to this couple than Abbey would.
Abbey and Nationwide lent the least overall on our examples. Abbey was the least generous on joint applications, while Nationwide was the least generous with singletons. Overall, a single applicant with a high income could usually borrow more than joint applicants with two modest incomes.
The two lenders that asked for information on dependants used it strangely (in my view). In one case Halifax reduced the amount that could be borrowed by just £600 per dependant (not much over a mortgage term!) but on the other example valued the cost of one dependant at £1,900.
C&G reduced a mortgage by £11,000 for borrowers with one dependant, and costed kids at £11,500 each in another example.
On the last example -- a single remortgagor with just 10% equity on a modest property and on a modest income -- none of the lenders would offer a mortgage of more than £200,000.
The nitty gritty
Below are the four examples:
1. First-time buyers with a 10% deposit, based on joint salaries of £40,000 (£25,000 and £15,000)
Lender | Amount that could be borrowed |
|---|---|
Halifax | Up to £180,000 if they had no children, and up to £179,400 with one child (difference per child £600) |
Abbey | Up to £152,000 |
Nationwide | Up to £170,000 |
C&G | Up to £192,000 if they had no children or £181,000 if they had one child (difference per child £11,000) |
Woolwich | Up to £200,000 |
2. Single first-time buyer with a 25% deposit based on salary of £60,000
Lender | Amount that could be borrowed |
|---|---|
Halifax | Up to £300,000 |
Abbey | Up to £282,000 |
Nationwide | Up to £255,000 |
C&G | Up to £317,000 |
Woolwich | Up to £300,000 |
3. Remortgagors with 40% equity, earning £70,000 (£50,000 and £20,000)
Lender | Amount that could be borrowed |
|---|---|
Halifax | Up to £315,000 with no kids and up to £311,200 if they had two children (difference of £1,900 per child) |
Abbey | Up to £294,000 |
Nationwide | Up to £297,500 |
C&G | Up to £398,000 if they had no children and up to £375,000 if they had two children (difference of £11,500 per child) |
Woolwich | Up to £350,000 |
4. Single remortgagor with 10% equity, earning £40,000
Lender | Amount that could be borrowed |
|---|---|
Halifax | Up to £200,000 |
Abbey | Up to £172,000 |
Nationwide | Up to £170,000 |
C&G | Up to £201,000 |
Woolwich | Up to £200,000 |